The Ingenesist Project

The Next Economic Paradigm

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Social Networks and Innovation Banking

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On November 1, 2010

In General Information

The real estate market is trashed, money markets are unstable, commodities are in the tank, the banking system is corrupted to the core, inflation is looming around every corner, and the politicians are engorging themselves in a game of Gridlock.

There is no safe place to put your money

Instead, people are investing their productivity in social media – social media is simply a storage device for knowledge assets. Soon it will become a stock exchange for knowledge assets. Investors should not take this lightly – the best place to store your money is in the real productivity of real people.

People are trading knowledge assets in social media

This exchange is denominated in social currency. If we mimic the structure of the Financial System with the emerging structure of Social Value Systems, we see a huge opportunity to develop an alternate financial system that can capitalize and securitize knowledge assets in social media.

Ingenesist.com

Music by Phil Felicia

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Social Value: The Aerobics Game

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On October 23, 2010

In General Information

The Social Value Game is a not a social currency exchange, it is a social value exchange. The objective of the game is to convert financial value into social value, then create new value, tax-free and frictionless in any number of social currencies, then convert it back to financial currency + social value. The strategy is to identify and leverage an existing high value social resource and organize a community of people and other vendors around that resource.

Consider the following example:

The Aerobics Instructor Game

Suppose that a popular aerobics instructor has 20 students and charges 40 dollars for an 8 week class. The local health food store will place 10% coupon on store purchases against the 40 dollar tuition for the duration of the class. If the student bought 400 dollars worth of food from the health food store in 8 weeks, their tuition for the aerobics course would be free.  If they spend more, then the aerobics instructor is paid more.  The health food store already spends 10% of sales on advertising so they are largely agnostic to the source of the impression.

It is in the instructor’s best interest to enroll people who are likely to spend the most at the store.  Given this arrangement, a sporting goods store may offer a similar coupon against tuition as would an Indian Restaurant, or even a health insurer.

The health food store gains loyal repeat customers without advertising

The aerobics instructor may maximize her profits by enrolling a health food chef or a caterer, a wedding planner, or people with large families.  She may negotiate a services with a hotel enrolling guests while extending food discounts to the restaurant. If she’s successful, event pictures pop-up on Facebook and deals appear on Twitter.  The aerobics instructor becomes knowledgeable about the products and the community and talks about them with her friends.

The Social Value Index

The Social Value Index compares the cost/benefit of the non-integrated advertising model with the cost/benefit of the socially integrated model of community benefit.  The Social Value Index rewards this store for enabling entrepreneurs in exchange for loyal repeat customers.  The Social Value Index favors this instructor for being knowledgeable and supportive of her community and available health resources. The Social Value Index rewards the network of secondary vendors who align with the aerobics instructor and who may likewise offer electronic coupons.

The coupon constitutes full disclosure therefore, it is clearly not in the best social interest of the aerobics instructor to accept coupons for, say, cigarettes. It is not in her best interest to cheat since her social value would be punished if her actions were found to be fraudulent.  The Social Value Index rewards Aerobics students for participating in socially redeeming activities. The alternative is for the Health Food store to drop a lot of money on TV commercials, Google Ad Sense, and Social Media Spam.

The Social Value Theory: 80% of the economy is social value, 20% is financial value

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Social Value Creation; A Blank Canvas

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On October 21, 2010

In General Information

The evolution of money

Money has evolved from coins to paper to electronic accounts. Now we see the emergence of mobile electronic accounts. Money may represent value but does it actually represent the value creation process? If not, then what does and which is more important?

PayPal wants to be like the electrical socket that all mobile payment innovations plug into.   In fact, they have a standing invitation for all technology partners in the mobile payment space to integrate with them. This is called an externalization strategy (much like Facebook, Twitter and Windows), where there are so many developers, users, and participants that NOT being on the platform becomes the competitive disadvantage.

The PayPal offer represents the separation of money from the value creation process.  This exposes a very interesting point to consider.

The Frictions of Monetization

The assumption is that PayPal et al will store and exchange dollars, and only dollars.  As such, they are contained within the financial system: credit score system, a person’s name, birth date, and the social security number as a personal identifier, the IRS reporting jurisdiction, and commercial code vetting mechanisms, etc.

Similarly, the drive to monetize in Social Media is pushing applications toward the same containment within the financial system.  Not surprisingly, the complaints of privacy and data security in Social Media stem precisely from association with credit scores, IRS, personal identifiers, Social Security Numbers, etc.  But “Big Social” presses on – they know not another way. Ironically, this is precisely the battleground; the source of all intermediary tactical and social friction that hinders monetization in the first place.  It has little to do with the creation of value – only containment of value.  To win is to lose.

A Better Proxy for Value

The reality of governance dictates that all business ventures begin and end in a standard currency of commerce such as the dollar.  However, there are NO restrictions on which currency must be traded in between to “create value”.   Nor is there any schedule that determines when a venture must begin, end, or be liquidated to dollars.

While The Social Value Game may start and end with dollars, the value creation process is carried out in a social currency using a “Social Credit Score”, an anonymous “Unique Identifier”, and a collection of “Social Vetting Institutions” independent of government or corporate jurisdiction.  The Value Game is a frictionless, tax-free and self-regulating environment without the guy wires of the financial industry.  The game simply leverages existing value socially to make new social value.

Social Value Specifications

The Social Value Creation Process is a blank canvas and we are writing the specifications today.  If a social currency becomes a better proxy for productivity – it may also become a stand-alone currency fully capable of capitalization and securitization. Theoretically, a social currency may never need to be converted to financial currency any more than a dollar ever needs to be convertible to silver or gold – it simply becomes another ledger entry on an accounting balance sheet.

Is Money Irrelevant?

The value creation process is the hard part.  Transformation of Social Currency into Financial Currency will become easy – anyone can do it.  In other words, if PayPal becomes irrelevant, the money evolution chain will be broken and money will become obsolete.  The market is wide open for a money competitor who can simply transcribe a social currency transaction into a ledger entry for financial currency. It’s a lot easier and closer to reality than many people think.

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The Social Value Game

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On October 19, 2010

In General Information

The Social Value Game

The value game is a social media business method developed by the folks at The Ingenesist Project in a dynamic application of social technology.

Most applications of game theory are controlled from in-house or deployed against a competitive landscape.  The Value Game is deployed external to the corporation and in a cooperative landscape where rewards are given to those who organize people around a “highly leveraged product” in valuable ways.

There are 5 elements to The Value Game

The first is what we call a highly leveraged product such as a conference, experience, convenience, ZipCars, or reunion – we’ll see that almost any product can be leveraged.

The next element is a secondary product vendor such as a hotel, restaurant, transportation, clothing, or equipment supplier – we’ll also see how almost any product can be deployed in the secondary role.

The third element is a consumer who seeks to minimize financial cost and maximize social value.

The fourth element is a 3rd party entrepreneur who is able to organized people in social networks and leverage primary and secondary assets in unique combinations.

The fifth Element is a true value calculator called the Social Value Index (SVI).   The SVI is the scorekeeper that calculates the actual value of the leveraged product after all of the discounts and social value factors are counted.

The game starts when everyone joins the same social network underwritten by a mobile electronic debit card platform and sets their filters for what information can enter (and to block out spam).  The highly leveraged product in the middle acts like a ball in play whose value is dependent on the interaction of the other elements.  Secondary vendors will deploy incentives into the field.  Third party entrepreneurs will organize people around the incentives and take social profits.  The Social Value Index will keep score.

Example 1: A ZipCar costs about 8 dollars per hour; this business model does not encourage social activity; it encourages fast shopping. Suppose that a person pays for the ZipCar on their debit card.  Local restaurants will be made aware of the purchase and then deploy coupons against the ZipCar to the buyer’s debit card. Next, a 3rd party entrepreneurs may improve the SVI by organizing a ZipCar swap so that the person does not have to leave in the same ZipCar that they arrived in and can spend more time shopping.  Another entrepreneur may organize events for families and friends that increase the passengers in each ZipCar, or by capturing any inventory from the community such as movie tickets or family experiences to deploy against the ZipCar.  After the event, the SVI updates the net cost of the ZipCar from 8 dollars per hour to, say, 1.42 per hour.  This is 80% savings on the ZipCar and 33% savings on a day out with the family over using their own car.

In effect, the leveraged product buys itself in a convertible social currency

Example 2: Suppose that a popular aerobics instructor has 40 students.  The local health food store may authorize her to give away 1000 coupons for 5% discount on store products.  In return, the aerobics instructor gets 5% of total purchased.  The health food store already spends 10% of revenue on advertising. It is in the instructor’s best interest to give the coupons to people who are likely to spend the most at the store.  After all, if 1000 people spend 100 dollars each, she stands to gain 5000 dollars.  The health food store stands to gain loyal customers without advertising. The aerobics instructor may maximize her profits by joining with a health food chef to teach classes in healthy cooking.  Or, she may join with a caterer, wedding planner, or hotel to supply an entire event for which she will receive social and financial value.  She may give them to colleagues who also become authorized to give away coupons – and she negotiates for a percentage of their output as well. She will become knowledgeable about the products at the store and talk about them with her friends.  She may even sell the face value of the coupons for cash since it is likely that a high bidder would also be a large customer for the health food store.  The Social Value Index favors this store, this aerobics instructor, and this social network – higher than competitors.  SVI registers with Search Engines and bargain hunters seek the Aerobics Instructor for deeper information and services.

Millions of applications will arise limited only by the imagination of communities not Wall Street

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How Obama Will Save The World

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On September 16, 2010

In General Information

Do the math – Interest on National Debt can go all the way up to infinity while Austerity measures can only go down to zero.   There is tragedy looming at both ends of the political spectrum and the Golden Goose can’t fly much longer.  Captain Obama is in a tough spot.

Someone will eventually need to gently lay the economy down in a nice soft spot with a just a few critical social programs intact. A task comparable to US Airways Pilot  Capt. Sullenberger who successfully landed his stalled airliner on the freezing Husdon without ripping off the wings, catching on fire, splitting the hull, or sinking the ship with all the passengers inside.

Here is how the endgame is shaping up:

Through some secret signal, all of the World’s money barons will come together and agree to simultaneously lop off three zeros (000) from all financial balance sheets.  This will effectively reboot the world economy.  A $50 trillion debt obligation now becomes a quaint and manageable $50 billion debt.  Unfortunately, a $500,000 dollar pension becomes worth about $500 bucks.   The game will reset with champaign toasts and business-as-usual in a race to conjure new debt into existence.  The recovery is on … for some.

Those who have exactly as much debt as they have tangible assets will enjoy a net zero impact.   Those caught at the extreme ends with too little debt or too much cash will lose spectacularly.

A stoic and sober Capt. Obama is at the controls, should we be worried?

Well, maybe. Just to give you an idea of what’s happening in the cockpit: Capt. Obama will project his glide path into the visible horizon.  If he can’t make it out to Hillary’s term, he will probably try to set it down right after he is re-elected and can still blame the GOP.  The GOP will try everything they can to wrestle it down before 2012 – split hull or not – so that they can claim the presidency.  If they win 2012 without the landing, they’ll land it soon after 2012 and blame it on Obama.  Note that none of this has anything to do with aerodynamics.

Why should this inspire anyone’s confidence?

There are a few people in the back seats working really hard to build a parachute that will hedge their fall.  None of the people near the cockpit, boardrooms, or stock exchanges have any idea what these passengers are doing – they don’t seem to care – instead, they are too busy topping off their debt to equity ratios for optimum survivability upon impact.

But, the hedge instrument is playing out in Social Media, slowly siphoning the factors of production into a new economic system. Some passengers are only inches away from jump-starting an alternate economy using a social currency backed by real productivity, not debt, in a new form of capitalism.  All they need is an instrument that is only a little better than what’s flying now.  Then, all the money in the world will convert to the hedge currency.

Now THAT’s monetization.

The guys near the cockpit will never see it coming – they’ll only see it leaving.  That’s how Obama will save the World. Let’s hope he can swim.

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Sell-ebrity Sects

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On September 8, 2010

In General Information

Waiting in the grocery store checkout line, there is never a shortage of glossy media about the sex lives of Celebrities. The stories are always the same, only the Celebrities change.

There are no glossy tabloids in the DIY check-out line where the objective is to check you out as fast as possible in order to meet a competitive “service quota”. In either case, however, the consumer is being extorted of value.

A sect is a group with distinctive religious, political or philosophical beliefs. In modern culture the term can refer to any organization that breaks away from a larger one to follow a different set of rules and principles. A sellebrity is someone who sells distraction for a living – they may talk about something that sounds like productivity, but it is really a distraction designed to maintain a status quo.

When marketers want you to do the same thing over and over again, you get Sellebrity Sects.  When marketers want you to change your behavior, they remove the Sellebrity sects.  The absence of sellebrities is equally interesting, and somewhat counter intuitive.   Yet, consumers think it is the exact opposite.  In either case, the consumer is extorted of value.

Sellebrity Sects refers to a set of rules or principles set out as different from the rest and used for the specific purpose of liberating you from your values; your time value, social values, financial values, even your family values.

Social media is introducing a host of new Sellebrities peddling some object designed to fortify their credibility, usually a book tour, keynote address, “Reputation”, social currency, or an A-list client. The ‘pitchman’ preoccupies the consumer into standing still long enough to create an arbitrage position for those who can exploit the TIME that you are not acting – either for branding or automating. When the arbitrage position collapses, a new sect is formed and the game continues.

Keep in mind that “Value” exists in many different forms, the game is intense, Time is the currency, and the story never changes. Look at the sellebrities all around you. Ask yourself why they are there. Try to identify the sects. Guard your social capital, creative capital, and intellectual capital very carefully – use it to increase your productivity alone.  Most of all, be different – they will either ignor you or pay you.

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Social Capitalism and The Innovation Bond

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On August 18, 2010

In General Information

We know the Venture Capitalists look for returns of 1000% on their investments. We also know that Corporate innovation (as reflected by the S&P 500) enjoys a long term median return rate of about 9-10%

It follows to reason that all of the innovation that could return somewhere between 10% and 1000% goes largely un-capitalized. This does not mean that the innovation does not exist – it only means that it is invisible to any existing financial system, it is accounted as “intangible” – or worse, it shows up as a liability.

Parents caring for children, Children caring for elderly parents, Mentors educating proteges, groups of people organizing, sharing knowledge, and growing families – all increase the net productivity of society. Legions of people creating options and opportunities for themselves and each other in communities, social media, and extended networks – all increase the value stored in communities.   Billions of people-hours inventing better ways to do the things that they do, compensating for the shortcomings of governments and corporations – all of this innovation falls into the range between 10% and 1000% ROI, yet, remains invisible and un-capitalized.

Social media as a whole is growing at well over 200% per year where every single interaction creates incremental multiples of social value – otherwise people would not do it (to say that people are irrational is to say that markets are irrational).  Where is all that value going?  Meanwhile, in the current Global financial debt crisis, institutions that hold huge amounts of cash are scouring the globe for pockets of low-risk productivity as sanctuary from volatile financial markets.

Now, suppose that an innovation bond were to come along which produces a risk adjusted return of, say, 15%. This means that human productivity is being reliably increased somewhere in a community by only 15% per year. If this were the case across a broad sector of inter-related communities where productivity were denominated in a fungible currency, investors would seek refuge in the Innovation Bond.  If the Innovation Bond returned say, 20% or more – all the money in the world may drop the debt based currency in favor of the innovation based currency by seeking refuge in innovation bonds.  Yes, I said it – “all the money in the world”.  Now, get over it.

Proceeds would be distributed to organized communities whose knowledge inventory is formatted like a financial instrument in the form of entrepreneurship. Proceeds would go to communities where the probability of success is known long before the bets are made in the form of Cheap Venture Capital. Proceeds would go to communities where productivity is defined by an un-corruptible algorithm through decreased volatility coefficients. Proceeds would go to communities where assets are valued accurately by true supply and true demand.  Proceeds would go to less developed communities with the highest social arbitrage potential rather than those with the most powerful marketers and lobbyists.  Most importantly, money would go to corporations that adopt the innovation economy. The stronger the institutions of Social Capital become, the greater the value of an innovation bond.  New production of goods and services would reflect these social priorities in the True Value Game.

In effect, Social Priorities will drive Wall Street priorities instead of Wall Street priorities driving Social Priorities – that is Social Capitalism

In the future, there will be only one sustainable investment left – people, communities, and their natural willingness and ability to be productive with their time. The rest is history.

***

Material based on video series here

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Social Currency and Time

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On August 16, 2010

In General Information

I recently published a video suggesting that Social currency is backed by Time as part of my series on Social Capitalism.  I made the argument that time is the true scarce commodity because it is not easy to debase, counterfeit, or forge; it is therefore the perfect basis for a currency.

Still, a few people always come back with the idea that influence, reputation, game tokens, tweets and more recently “checking in” (a la Foursquare), are all social currencies – citing the experts, of course.

There are several problems with this.  First, none are really scarce – I can find an honest person anywhere.  None are actually commodities because nobody is deploying the identical influence as any another person.

The idea that “currency” as the storage and exchange of value is also insufficient – a glass of water stores value as does a digital camera or a even a goat.  Nobody in Silicon Valley is twittering feverishly about the latest surprise goat farm acquisition.

Indeed influence and reputation are valuable and may act like a financial Instrument but until the purveyors come out and actually describe it as such, I need to call them on their choice of words – and I have.  A typical response is, “Well, uh, you know what I mean”.  My response: “…And, uh, you DON’T know what you mean?”

Beanie babies, tulip bulbs, and CDOs were financial instruments too.  Seriously kids, clarification is extremely important because the consequences of misconception, especially in this important emerging subject area, are tangible. Real people trying to make the wrong ideas real actionable are wasting their real precious time.

Here is what they mean to say:

a Derivative is something whose value is derived from the value of something else.  So when we talk about influence, the value of a person’s influence can be derived from the value of many things.  If you are in a burning building, the influence of the firefighter is different than an endorsement from Shaq, yet both may be valuable at different times.

The premise of my argument is that the basis of all currency is in Time.  Time is limited for everyone.   A good reputation saves people time.  The right influence applied in the right places at the right time saves people time.  Passion, purpose, productivity and persistence are measures of how someone spends their time.  Checking in at the trendy hotspot on foursquare is an expression and commitment of time. Co-location is a function of place and time. Like love, the value of time is in the eyes of the beholder. Valuable yes, currency, no.

Talk about how your product lives in time and you’ll earn all the social currency that it’s worth – not the other way around.

 

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The Next Great Leap for Social Capitalism

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On July 17, 2010

In General Information

The Knowledge inventory will become the most important element of Social Capitalism.  Today, knowledge is largely sequestered behind the walls of corporation in the form of titles, skill codes, resumes, job descriptions, certifications, and college degrees.  In order to predict the future, we point to the things that we have done in the past.

2nd Place is 1st Loser

10% of the country is unemployed and less than 10% are fully actualized in their profession.  Competitive forces drive the hiring manager.  The consequences of all business decisions eventually lead to win-or-lose market scenarios.  People compete with each other for promotions, the boss’s time, the corner office, or just staying off the unemployment line.  That is the only future anyone can truly predict based on the past.  It’s easier to predict the loser than the winner – so that’s what happens.

Social media is very different.

People are organizing themselves in a new form outside the construct of the corporation.  Linkedin aggregates intellectual capital, Facebook aggregates social capital, and You Tube aggregates creative capital.  Millions of blogs, Twitter, and a generation of search engines reassemble all these parts in ways that create social value.  People are not competing with each other, instead, they live on a bell curve.  They are seeking cooperation and collaboration. People use “like” buttons, tweet counts, and analytic data to “value” the quantity and quality of another person’s knowledge.  There are fewer losers, hence more winners,  because there are a greater number of  markets – not just one corporation.  Everyone is a corporation.

No Governance, no anarchy, no problem

Since social media is outside the construct of a corporation, there is no governance. There are lots of people trying to control only to experience diminishing returns.  Microsoft, Apple, Google, and Facebook must tread extremely carefully on the landscape of public opinion precisely because of their dominance.  People use Facebook to attack Facebook, PowerPoint to attack Microsoft, YouTube to attack Google, and Twitter to attack everyone.  Retribution would be suicide.

The Last Mile of Social Media

Now, geo-location services are filling in the Last Mile of Social Media where communities will form to produce things that are tangible and real.  As a result, there is a sharp increase of interest in a form of currency that can represent this social value.  Some of this is because the dollar is losing its ability to represent people’s productivity.  So they engage a different economic system.

Social Productivity

The next great leap in Social Media will happen when people reorganize themselves in an external knowledge inventory, outside of corporations, and segmented in high granularity of knowledge assets in close proximity to each other.  Entrepreneurs can then assemble people in unique, efficient, and productive ways.   People will then build things for profit using a new currency – a new social currency.

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War Is A Social Agreement

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On July 15, 2010

In General Information

I often make the point that a currency is simply a social agreement. People need to agree that a monetary unit represents their productivity so that they will use it to trade their productivity with the productivity of another person. The test question for any so-called currency (coined by Jay Deragon) is: “Yeah, but can you buy groceries with it?”

I am now seeing a SHARP increase in the social interest for an alternate currency to the dollar. The dollar does represent productivity – albeit future productivity in the form of debt – that’s why it is still exchanged for the work that we do. My suspicion however is that the social agreement regarding the dollar is, in fact, increasingly becoming a social disagreement.

People have a deep seated unease with what the dollar is and what the dollar represents. To escape the dollar is to escape a tangle of influence that impacts everything we say, do, and think about ourselves and about each other. It almost seems that to escape the dollar is to escape ourselves.

That’s just the idea that came to me after watching this video about a soldier questioning the occupations. He is saying something very interesting:

War is simply the soldier’s willingness to fight it. It is a social agreement.

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Song For The Sea

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On July 7, 2010

In General Information

I recently received an email from a major on-line publication collecting “Letters To The Gulf”.  I wondered, What would the Gulf Say to Us?   That question sounded familiar so I dug through some old video tapes looking for that long-lost club gig from my days in the Hollywood Rock Band Circuit back in the Late 1980’s.

This piece is called Song For the Sea and it was written shortly after the Exxon Valdez spill in 1989 and amid controversy over illegal long net fishing practices.  Lance McCormick is playing Bass and Keys, I am on Drums, and Phil Felicia is on vox and axe.  It is pretty interesting how timeless this theme is.

Interesting features:

Phil uses a can of Tuna as a slide to make the sound of expiring whales and sea life.  His guitar solo is an enactment of a tuna fish thrashing in it’s final moments of life.  I remember that I could barely contain myself, it was so funny to watch – I almost fell off my seat in hysterics every time Phil did the part – but it was powerful imagery especially in later shows after we worked out the shtick a little better.  I think we all took stabs at the lyrics. Keep in mind that this was 20+ years ago in Hollywood California – the objective was to be offensive, shocking and controversial so don’t get too riled up over our choice of words. On the other hand, they do contain an interesting historical perspective from a bunch of kids (transcribed below) in the late 80’s.  The band was called “Rage In Eden”, affectionately named after Gulf War 1

So here is a blast from the past in loving dedication to BP and the gang
***STRONG LANGUAGE ADVISORY***

Song For The Sea

Welcome to my Universe
Once the mighty sea
Turned dumping ground
for all the pigs to see

Now I’m left here in your waste
drowning in your own disgrace
(let’s do it)

Spilling Toxins in my Sea
My putrid flesh bears the stench
of your rotting soul

So I put it to you
Mr. Politician Man
Whatever Gave you the right
To come and punish my world

With your – (indiscernible) – high and low
All I live for in my life
Is just a paycheck to you

So I put it to you, Mr. Businessman
Whatever gave you the right to Punish my world

Dogs dig in my shores
Dollar Whores
I need you to taste the decay and waste
we sold you, yeah

So I put it to you, Mr. judgment man
What ever gave you the right
to punish my World.

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Social Currency Hedges Financial Currency

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On July 2, 2010

In General Information

I have yet to see anyone of any importance in the social-media-guru-camp who has identified the inherent dichotomy between social currency and financial currency that rages all around us.  No, seriously; every financial action is balanced by an equal and opposite social reaction.  It’s a balance sheet of the balance sheets.

BP underestimated the social liability of their financial decisions by a factor of 100,000:1.  US Corporations underestimated the social liabilities of outsourcing the knowledge economy by a factor of 1000:1,  US Government underestimated the social liabilities of Wall Street Bankers by, likely, 1000:1. Tiger Woods underestimated his social indiscretion by a similar ratio; 10,000:10.  Mel Gibson is trending hard on Twitter this week….etc.

I received the following press release today from “Professor Guru” at a famous US University:

US CITY, July 2 – despite a slight drop in the national unemployment rate, the situation is still grim for millions of Americans and thousands of businesses, many of whom fear double-dip recession.  Beyond the numbers are some under reported aspects of the current situation: the toll it takes on employee morale and how it forces companies to manage downsizing in a manner that maintains their reputation, avoids embittering their terminated employees and keeps their remaining employees engaged.

Astonishing Omission:

Nowhere does this statement address a notion that for every dollar of financial currency saved, X amount of social capital will be lost. This is an astonishing omission of statement and purpose.  All the social currency is well-accounted for with guru code speak like: “grim”, “takes a toll”, “morale”, “reputation”, “embitterment”, “terminated”, and “engaged”.  And, all the financial currency verbiage is accounted for with pop-terms like: “double dip-recession”, “under-reported aspect”, “the numbers”, “downsizing”, “remaining employees (assets)”, etc.  The call to action statement, of course, is that the situation “Forces Companies to manage….” or, to act in some new way that will,… uhmmm, well,….. what is it? ….minimize, balance, exploit, empower, update the Facebook page….what?.

Really, it’s time to get real:

Nobody is willing to say that for every dollar of financial capital saved, X amount of Social Capital is Lost.  Obviously, nobody in their right mind would say that social currency is acting as a hedge on financial currency.  Nobody has the guts to say that to cultivate social currency is to gain financial currency.  Nobody is willing to acknowledge that if there are riots in the streets of America, the US currency will crash.  Certainly no politician is willing to admit that it does not matter if that happens, it only matters “when” that happens.

Turning point of civilization

We are at an extremely important phase in World History.  Will social media provide the fabric that society has lost from the domination of financial morality on social priorities?   If so, then then keep your eyes on the ideas of a social currency conversion factor to drive Social Capitalism as a replacement for Market Capitalism.

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Financial Currency vs. Social Currency

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On May 26, 2010

In General Information

The difference between the current economic paradigm and the next will balance on the difference between financial currency and social currency. Let me explain:

The flawed calculation

Obviously, the Gulf Oil Spill was a result of a flawed calculation. As a result, the rig was not equipped with an “acoustic trigger” in the event of an explosion – should the dying surface workers fail to hit the manual cut-off – this device would automatically shut the well.   The device costs 500,000 dollars.

The estimated damage at 1 month of constant spilling was estimated at 14 Billion dollars with no solution in sight. The residual social cost in unemployment, health and destruction of social fabric could easily double that score. The long-term cost to industries and natural ecosystems could double that number again.

Score: 500,000 dollars vs. 50 Billion dollars; The financial currency to social currency ratio = 1: 100,000

Ted Nugent, a fervent and vocal Republican, Tea Party spokesperson, 2nd amendment activist, hunting enthusiast, and hard rock guitarist accuses this nation of losing it’s culture of accountability. His quote on CNN this weekend “I never had a fire, but I have a fire extinguisher in every room of my house. The spill was a criminal act of negligence”. In this case, I would have to agree with ‘The Nuge’.

Accountability is a calculation

When a company performs a cost benefit analysis, they look at the remediation cost of peril and the cost of mitigating peril and the probability that the peril will occur. The problem arises from the valuation of remediation cost; quoted in financial dollars “subject to litigation” when it should be actually be quoted in social currency. Litigation risk is not a proxy for social currency.

In the example of the Gulf Oil Spill, this equation was off by a factor of 1:100,000. Every other possible failure calculation that could have occurred was likewise flawed by the same ratio. Therefore, there is 100% probability that none of the perils were properly mitigated, hence, accountability was zero. I am sure the 11 workers who perished would have agreed.

Scraping the Deep Web

So what would accountability look like? We see that Social Media, in general, provides a remarkable system to punish low integrity and reward high integrity. Could this medium of exchange in social currency provide an accountability standard to hedge financial currency?

If Facebook can map the human consumption genome, technologists certainly have the data scraping ability to develop a true value calculator that can compare financial value to social value for any venture, prior to the venture being executed. In fact, we should be able to predict what ventures are more likely to occur given the relative values of social and financial currencies. The fear, of course, is that this will hurt business.

True leverage calculator

A true value calculator would, in fact, be better for business because it improves business intelligence shifting opportunities to meet true market demand. A true value calculator would not eliminate markets, it would liberate the true demand of a market. And if that is not enough, consider the 100,000:1 market leverage that the trade in social currencies could have over financial currencies.

Now that’s a business to consider!

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To Accelerate Serendipity, The Whuffie Factor

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On May 13, 2010

In General Information

Tara Hunt; Future of Money and Technology Summit 2010

In 1999, Cluetrain Manifesto flipped everything we knew about online behavior on it’s head. The integration of information being published on the Internet reached a tipping point indelibly articulated for all time by Doc Searles: “Markets are Conversations”

The Whuffie

In 2003, Cory Doctorow published Down and Out In The Magic Kingdom where he introduced the concept of Whuffie as a form of reputation currency that accounts for social value in a fictional future society. In Cory’s thesis, people who produce things that represent social value were awarded Whuffie. People who produce anti-social value were punished Whuffie. The twist was that everyone has equal say as to who is awarded Whuffie and who is punished Whuffie. In retrospect, the concept of Whuffie, stands today an important metaphor marking the beginning of the social media revolution.

The Whuffie Factor

In her book The Whuffie Factor (2009), Tara Hunt identifies the facts of a reputation backed exchange among real people, communities, companies, and social interactions – with all their associated human complexities. By the gift of wisdom or intuition, Tara’s choice of the modifier “Factor” is an important distinction. In mathematics, a “Factor” is a multiplier against some other quantity.

Social Capital

In Tara’s book, Whuffie is roughly synonymous with ‘new’ social capital – a hugely complex financial instrument that is currently emerging before the eyes of all practitioners of social media. In 2010, everyone still struggles to articulate social capital with a 1999 vocabulary of new conversations living in old financial markets. There simply is no word for the phenomenon of social media daily manifesting in so many new and valuable ways – it’s just too new.

Yes, Tara has critics, but most I believe are short sighted. The term “Whuffie” is as good a word as any, so deal with it. The term “Factor” is what Tara is really talking about, so lets move on.

Love ’em or Hate ’em, Whuffie is a Derivative.

From Wikipedia: a derivative is any agreement or contract that is not based on a real, or true, exchange ie: There is nothing tangible like money, or a product, that is being exchanged. For example, a person goes to the grocery store, exchanges a currency (money) for a commodity (say, an apple). The exchange is complete when both parties have something tangible.

If the purchaser had called the store and asked for the apple to be held for one hour while the purchaser drives to the store, and the seller agrees, then a derivative has been created. The agreement (derivative) is derived from a proposed exchange (trade money for apple in one hour, not now).

Infinite Possibilities

In short, the current value of the relationship is backed by the past and future value of the many other relationship(s) formed. The twist is that social media has vastly equalized people’s impact on the true value of relationships – this remains consistent with Doctorow’s thesis. Tara takes us a step further where the underlying asset can be generalized as simply “value” where the Whuffie Factor is a derivative against this value. This is consistent with Searles’ thesis.

Social Currency

In my opinion, The Whuffie Factor will become one of the seminal books of its time period. Indeed there are many excellent books in the genre of collecting, building, engaging, storing and exchanging trust, reputation, or influence in Social Media. What sets Tara’s book apart is that, like Doc and Cory, she had the guts to call it something real.

Elevate the conversation or get out of the way

Tara Hunt effectively nails this profound abstraction to the floor so that the rest of us can now walk through to define and articulate the Holy Grail of our generation; a true Social Currency. Bravo Tara, Bravo

To Accelerate Serendipity, that’s the Whuffie Factor.

Photo Source/Credit; Jesse Lara

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Two Sides Of The Social Value Equation

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On May 7, 2010

In General Information

There are two sides to the Social Value Equation – the creation of social value and the destruction of social value. There are countless examples where innovation destroys the value of prior technologies. There are also many instances where “progress”, perhaps in the form of a freeway or public structure, divides a community where strong social bonds once acted.

In the presentations that I give, I often cite the value of a bridge over a waterway. The bridge may cost 50 million dollars to build and maintain, but it increases human productivity by 50 billion in the life span of the bridge. We often cite a factor of 1:1000 for the valuation of the dollar to social currency.

Contrary to that, Jane Jacobs (renowned urban theorist and community activist) may argue, the bridge (and roadway) may divide a community or neighborhood. Where the community may once have been scaled for foot traffic, the new boundary may require a car to circumvent. The new road may divert old commercial traffic in many ways that are bad for a community. In such a case, the social capital destroyed by the bridge is in fact the dominant financial outcome.

So here I am, I just destroyed my own best analogy to demonstrate a point. Without vetting the complete transaction in the form of social currency, net “progress” of any kind is as easy to leverage backwards as well as forward at a rate of 1000:1.

Communities that seek to stop a disruptive development program will often organize to protest urban development decisions. Unfortunately, they are usually up against a calculation of economic impact that is dominated by dollar denominated currency. Without a “Social Currency” of their own, quantified and convertible to dollars, communities are doomed. Law suits will play out in the same manner where damages are non-quantifiable, and therefore non-existent.

Jane Jacobs also writes that a community that can place a value on their social currency – although I do not think she explicitly called it that – and can act to preserve value or increase value by their actions. Many communities from Greenwich Village to Boston have thrived under a social currency diverting projects away from sensitive communities. The Big Dig went underground in Boston much like the The viaduct replacement project will do the same Seattle. Granted, the Seattle project mainly preserves water and mountain views for million dollar condos, this concept, in fact, would be more critical to poorer communities than wealthy ones.

Obviously there is no way to impede progress. All innovations destroy prior value in the creation of greater value. The danger is when Wall Street priorities can dominate Social Priorities. Capitalism, for all the greatness it creates, is amoral. Capitalism is committed to dollar currency, and devoid of social obligation except to the degree that obligation is profitable – that is where social currency converts to capital currency.

Through the magic of the fractional reserve system, Banks create money backed by debt vs. deposits at a factor of 1:1000. Therefore, the convertibility of social currency with a capital currency at a similar factor of 1000:1 is essentially the only effective way to convert Social Priorities into Wall Street Priorities.

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Facebook Derivatives

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On May 5, 2010

In General Information

It seems ironic that people are using Facebook to urge others to quit Facebook. If they take their own advice, they would no longer be able to give their golden advice to others. If we took their advice, we would not be able to heed the advice of others in this matter.

Is Facebook too big to fail?

The human race is becoming a super-organism of connectivity. Companies like Facebook are duplicating the functions that governments have performed – by various methods with diverse consequences – since the dawn of civilization. There is nothing new about Government organizing society and pandering to corporations. There is nothing new with people protesting governance. There is also nothing new with forms of governance being replaced by an evolution of human consciousness.

The Next Wave of Innovation in Social Media?

First; Facebook itself has no value other than the value of the people and their networks. As such, Facebook behaves like a financial derivative – it is not the actual item of value, it is simply a utility contract representing value.

Second; Facebook can only deal in information – it cannot deal in “knowledge”. Your information is a derivative of your “knowledge”, not the knowledge itself. The real value of a social network is in what lies between the ears of the members. Therefore, one way to encrypt the information is to encrypt the knowledge.

Third; Suppose that your “resume” were coded as a list of numbers and operations representing the quality and quantity of the things you know. Suppose the people in your network were also coded in a similar fashion. As such, your network, would be a combination of these codes. If you really “know” someone, it would be easy to find them. If you don’t know someone, it would be impossible to find them.

Fourth: The game changes because the incentive now is to “Mind Meld” with real people. Marketers can only then profit by telling the absolute truth about what the product is and the affinity that the product serves – anything else defaults to a “no-sale”. The person can then set filters to be notified of products and services that can make them more productive in pursuing the things that they love and care about – their community.

An Emerging Evolution

Many People cite Cluetrain Manifesto (1999) as the start of this higher consciousness. Cory Doctorow introduced a concept currency called the Whuffie (2003). Tara Hunt, Chris Brogan, Brian Solis, Seth Godin, Clay Shirky, Jay Deragon, and many others expanded the idea of trust and reputation in the formation of social capital and associated social reorganization. As these ideas are reconstructed, especially in a form that is independent of the construct of the Corporation, Social Capital is emerging as a highly complex instrument – not unlike a derivative.

If not human knowledge, then what?

Now we notice that Facebook, Whuffie, and Wall Street Dollars are all built on derivatives where the underlying value is human knowledge. That is where all the man-made value on Earth is stored, period. The value stored by Human Knowledge hedges all bets. Nobody has a monopoly on it, but everyone is trying to figure out how. To do so would be to destroy it.

Code knowledge to set it free.

Despite all of the grumbling about Facebook, Wall Street, and all issues Political, there is a clear path toward a higher purpose in all of this. We should ponder this and be quite grateful.

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m-Via; Social Currency and Technology

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On May 5, 2010

In General Information

If necessity is the mother of invention, then the Future of Money and Technology Summit 2010 was Paul Revere. There were many innovations that seek to change banking as we know it using a new denomination called social currency. This article (and more to follow) will identify the difference between two business methods – one that squanders social currency, and one that liberates social currency.

m-Via, is a money remittance company focused on allowing consumers to use any mobile phone to make international money transfers. m-Via focuses on the huge flow of remittances from the US to Mexico. I am personally directly aware of the challenges related to money transfers across international borders specifically Mexico; bank fees, extra ID, teller costs, time, risk, conversion fees, etc.

It is obvious to me that M-Via is looking very closely at how, why, and when people interact with a the banking system. The Banks are doing the same thing. The difference is that Banks seek activity thresholds and then design limits that seem to trigger artificial and exorbitant fees. Instead, m-Via seeks to reduce the friction in the transaction to meet the lives, schedule, priorities and concerns of the customer.

m-Via is trading in social currency

Banks are squeezing the least deserving by charging hidden fees for services that cost them nothing. For example; most people transfer small amounts of money on a steady cash flow schedule. Most people can’t spend the time to travel to a western Union on one side on each side of the transaction where travel expenses and security issues may be a constraint. Money is often redistributed among family members once in the target country. This is the reality of people, not an opportunity to set artificial thresholds to drive profit.

Paying money to a bank for the privilege of paying money to the bank…what?

m-Via drives a social currency by reducing risk, increasing yield, and helping people organize in the manner that suits their reality – not that of the banking industry. Most people who need money, don’t necessarily have the ‘money’ to absorb high transaction costs of time, risk, and inflexibility. Current banking practices extol a high social currency cost that amounts to “negative” interest rate against the consumer – in other words, people need to pay the bank in order to pay the bank to use the bank.

m-Via is already seeing a week over week growth of 15% in participation. I expect this growth to continue especially as many other technologies arrive to build out the infrastructure of transactions and business methods that are supported by a social currency.

Disclosure; m-Via was a sponsor to the Future of Money Summit and Technology but has no formal relationship or position in the Conversational Currency Blog.

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Who Is Quantified by Whom?

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On May 3, 2010

In General Information

What is a Non-quantifiable Exchange?

The term “Non-Quantifiable Exchanges” was the title of a panel session that I attended at the recent Future of Money and Technology Summit. In researching the subject, it appears that a “non-quantifiable exchange” is more notable for what it is not rather than what it is. Case in point – after the precursory Google Search, the term and a modern definition does not exist – but the room was full !?!?!

With all of the talk about cloud sourcing economies and romantic notions of emerging organic currencies, it would seems that people could just get along fine without a central mechanism for storage and exchange of value. Instead, each individual would assess the value of the transaction in terms of what it means to him or her. Currency could then take the form of a person’s reputation, productivity and general usefulness for assessing value and helping others to do so in their community (reference)

If it’s not an asset…or a liability, then what is it?

Traditional valuation systems for businesses immediately start tugging at a host of standard assumptions for measuring “performance” – many of which are no longer meaningful. Land, Labor, and capital cannot be deployed to the same efficacy whereas social capital, creative capital, and intellectual capital are being liberated to social media with astonishing results.

Nobody can produce an accurate ROI for social media, however, social media presence is becoming a substantial factor in the valuation of a company.

Likewise, reverse access to personal information about customers on Facebook is both the lifeblood and poison of new engagement marketing. The general public have become “external intangibles” to the business plan – where the heck is that on a balance sheet?

Goldman Sachs claims that those who bought their worst subprime products were sophisticated investors whose obligation it is to understand the quality of the underlying components. Their defense is that the customer failed, not the system of disclosure.…what? How long would Dell last if this had been their response for poor quality?

Cloud Economics or Inversion System?

Vapor is quantified by the balloon that contains it. A cloud is quantified by the weather system that surrounds it. The atmosphere is quantified by the mass of the planet and it’s proximity to a sun, and so on. Therefore, the term “non-quantifiable”, and the word “exchange”, are mutually exclusive. If there is an exchange, there is quantification.

Suppose I was to suggest that value stored in social currency may exceed the value stored by financial currency. The paradigm shift now becomes, who quantifies whom?

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Social Currency and Anonymity

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On April 24, 2010

In General Information

The subject of privacy and anonymity are again rising up with the latest move by Facebook to integrate updates across the Internet onto the Facebook platform.

Conspiracy theories about Facebook and the CIA continue to flourish.  Meanwhile, the marketing and advertising industry seems poised to reboot their dwindling influence under a new cloak and dagger of social media data hustling and predictive demographics rather than playing by new rules of engagement.

Money is one thing and value is another.

I am astonished that people willingly and freely give up huge volumes of information about themselves when they really don’t have to.  In earlier times, marketers and advertisers would pay a great deal of money for far less information that people give them for free.  People do not understand the value that is stored between their ears or how easy it would be to set up an alternate economy that trades in social currencies.

If advertisers can pay someone to cold call me, to graph my data across the web, or sneak around my social networks, then they can certainly pay me to answer the phone.

The Ingenesist Project specifies an Innovation Economy built on the platform of social media.  While that thesis is extensive, let me summarize that the primordial soup of the Innovation Economy is called the Knowledge Asset Inventory.

Anonymous assets

One essential element of the new economic paradigm is the ability to combine knowledge assets so that innovation becomes predictable and therefore capitalized. However, a side effect is that such code makes the individual containers anonymous.  Marketers will have to pay you to find you.  here is why:

Now think about it this way – if you remove 20-dollar bill from your wallet to buy a Latte, you do not know (nor do you care) whether the last transaction performed by that 20-dollar bill was a donation to a charitable cause or a drug deal.  The dollar bill is anonymous – but you, as an asset, are not.

Social Currency is a Social Imperative

Dollar denominated money is a system to control social currency at a leverage factor of 1000:1.  Take away the dollar currency, and the leverage disappears.  Add a social currency and the national debt disappears.

Almost as a bonus, it is an absolute impossibility for marketers and advertisers to store and exchange value denominated in a social currency without extraordinary changes to the way they engage their clients….like, uhm, …don’t waste our time.

If we are smart, we can shut down the privacy issue in a hurry – anonymity of knowledge assets is the key.

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The 1:1000 Rule; A Social Currency Imperative

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On April 22, 2010

In General Information

What’s the difference between money and value?

Today, I saw yet another doom gloom economic forecast with the proverbial exponential graph of interest-on-debt climbing out to the stratosphere. The prognosis is the same; all bad, very ‘all bad’ things will happen.

So I wonder, to whom is all this interest being paid? Where is all that money stored? It has to belong to someone or be represented by something on the planet Earth, after all, money makes the world go around.

The 1000:1 rule

If I were to take, for example, NOA, the National Oceanographic Agency, and ask someone a Goldman Sachs to place a value on it, they would add up the replacement value of all the ships and weather satellites and come up with a number like, say, 4 Billion Dollars.

Now, if I were to calculate the increase in human productivity that result directly from the ability to forecast the weather – for the purposes of food production, managing all modes of transportation, Energy production, and tangential resource allocation – the value of NOA would be in well in excess of 4 Trillion dollars. This is a factor of over 1000 between the value of the same object in financial currency and social currency.

A bridge spans a waterway and carries 50,000 cars and trucks per day. An alternate route would take each vehicle at least 1 hour longer per day to cross the waterway. 50 billion dollars worth of social value is created over the life of the bridge that cost 50 million to construct; a 1000:1 leverage ratio.

A single Boeing 747 costs 100 million dollars but increases human productivity (including influence ripples) by 100 billion dollars over the service life of the aircraft compared to the nearest alternative mode of transportation. Again, 1000:1

That’s the difference between money and value.

The problem arises because our financial system is not able to articulate true value of social currency using a dollar denominated currency so social value remains invisible, not non-existant. Maybe the financial system does not want to articulate social value. After all, dollar denominated currency represents control of social value at a ratio of 1:1000. It’s about control

9.6 Trillion dollars was spent to educate every American. Just because a “corporation” does not exist to employ them and utilize their talents to the highest productivity level, does not mean that the talent and value does not exist. According to the 1:1000 rule, The GDP of the US in Social Currency is a minimum of 9,600 Trillion. What deficit?

It is about control. The dollar has a 1:1000 control leverage over social currency. It is not at all surprising to see social media expand at the rate proportional to that which the doom-gloom crowd predicts that the financial system will collapse. They are related, they hedge each other. Don’t let anyone convince you otherwise.

Again, the imminent collapse of the financial system – no matter what the ‘doom gloom’ crowd says – does not mean that value does not exist; it simply means that the dollar will no longer control the value; that is, the social value wedged between people’s ears is free to be capitalized and securitized directly. We need to capture social currency in a new financial paradigm.

Social currency is not a buzz word, it’s an imperative – it is the Ingenesist Project

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The Brain-Picking Economy

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On April 8, 2010

In General Information

I come across an increasing amount of posts and discussions related to alternate currencies, social currencies, and knowledge as a tangible asset, etc.  It is as if people are grappling with something that they don’t quite understand or can’t quite grasp – but, soon will.  Really, don’t lose heart – they are definitely on to something.

Sandy Jones Kaminski of Bella Domain provideds a well developed argument against letting people pick your brain by proposing the “no brain picking list”.   While somewhat tongue-in-cheek, the article portrays a common frustration felt by specially qualified people who get too many requests for “brain picking” and not enough turkey sandwiches to justify the time-value of the exchange.

[People who ask to pick your brain are either asking you to work for free or they are trying to bypass the very hard work required to build a social network by asking for your referrals]. While not quite a reason to end brain-picking, it certainly indicates a hugely inefficient market.

Taking some clues from the banking industry

A bank seeks to match most worthy money surplus  (rich people who will not pull their deposits abruptly) with most worthy money deficit (employed people with good credit history).  In order to accomplish this, the financial system has 5 essential components: a currency, an accounting system, a vetting mechanism, entrepreneurs, and business plans.

Now suppose we transpose the rules of finance on the rules of brain picking.

Currency

A currency is defined as a vessle that stores and allows for the exchange of value.  So it’s natural to expect that relationships, networks, “contacts”, “followers” and all the other accoutrements of social mediation are means by which we store value.  We invest time in developing our own knowledge assets and we invest those assets in our relationships.

Accounting System

The balance sheet needs to, well, balance.  The first assumption I make is that every single living breathing person on Earth holds value. It’s only a matter of whether they have a surplus in knowledge assets in that which I have a deficit and vice-versa. Since my deficits far exceed my surplus in the vast majority of human knowledge, I am always looking for a fat juicy brain to pick as well.

Vetting Mechanism

If the game isn’t fair, nobody will play.  Social media provides the most critical element of brain-picking economics.  Any time someone asks to pick my brain, I’ll do a Google search or conduct a social media profile on them. What I find will quickly determine what the initial contact will involve a courtesy email or a 3 hour golf game.

Business Plan:

Buy low sell high.  That’s the mantra of capitalism, but it remains “unspoken” in social media.  If a person is very successful at picking brains, there is an inherent quality in that which may be useful to me. I will study them. If other important people have allowed this person to pick their brain, why not me? If I’m getting a lot of pickers from a certain demographic, maybe that represents a business opportunity, seminar market, or speaking engagement.

An entrepreneur is as an entrepreneur does

Entrepreneurs do nothing more than identify assets and elevate them from a low level of productivity to a higher level of productivity.  I ask my brain picker who they have also discussed the matter with. I also ask them places and dates of those interactions.  I ask them about people in their social network, rumors, concerns, projections.  I ask them their goals an objectives in talking with me – exactly as I would do for any client….

…well before you know it, I’m picking their brain.

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Culture: When Engagement Is Not Optional

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On March 26, 2010

In General Information

Today we see Social Media duplicating many of the functions of earlier society by storing community wisdom, applying social vetting, and deploying social currencies.

It takes a Community

Here is an article is about a a person who learned through social media profiling that her fiance was active in hobbies that conflicted with her moral constitution – before the wedding instead of after.  In the old days, the community would also profile each individual based on the social record of their behavior.

Social Capitalism

Here is a video article that discusses how social media is  duplicating many functions of the corporation outside the construct of the corporation. Factors of production increasingly enter the org chart as a social media application.  We now question whether the corporation itself is the sole vehicle of wealth creation.

Social Currency

We see social media duplicating many of the functions of the financial system where currency, credit scores, banks, land, labor, and capital are being replaced by social currency, social vetting, social capital, creative capital, and social entrepreneurs.

Macro vs. Micro

We see divisions of scale from the long-winded one-sided content of the static web presence to the micro blogging applications that more closely resemble a conversation.  Time factors are accelerated to the point where real-time is not fast enough.

Local vs. Global

We see an emerging segmentation between Local Social and Global Social. At first global leverage was the awarded the small entrepreneur with something to offer to the world.  Now ‘Local Social’ enjoys substantial leverage over global corporations by reorganizing the way people prioritize and experience each other and their community.

Everyone is a node

Taking an analogy from the physics of electricity, the term “potential” means the difference in energy between two nodes.  The greater the difference, the bigger the spark and the greater the impact.   The local energy at each node influences the direction and size of sparks between nodes.  As people accumulate ‘Social Current’, their position relative to those around them changes. Likewise, their potential also changes relative to the ‘Social Current’ of others. Everyone has some potential relative to every other node.

Integration has arrived

Much like the knowledge economy integrated, but did not replace, the agrarian economy, Social Media will not replace the corporation, the financial system, dissertation, conversations, localization or globalization.  Rather, everyone becomes a corporation, everyone prints their own social currency, everyone publishes their intentions, everyone has local and global leverage.  That’s what Integration is all about.

A ‘culture of one’ is moot.

It is not surprising then that our culture itself is now being defined in terms of social media with effective aggregation of  social norms, storage of social wisdom, and medium of exchange for community ideals.  The true test of “culture status” is when engagement is no longer an optional.  Without engagement, there is no culture.


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They Should Pass A Social Currency Option

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On March 23, 2010

In General Information

My new favorite rebuttal to any argument from economic ailment to political controversy is: “I’d like to see a social currency thrown into the mix”.

It is really convenient to have the same position on all issues; Health Care, Terrorism, abortion, financial meltdown, education reform, and political scandal – my response is the same. “I’d like to see a social currency thrown into the mix”.

What the heck am I talking about?

Several recent blogs articles (and here, and here, and here) have converged around the idea that social currency is something that people earn from being active in a community, network, or social organization. Social Currency in lauded upon the recipient in many forms such as Google juice, respect, engagement, trust, re-tweets, reputation, merit badges, check-ins, tokens, Whuffie, wiggly worms, etc…

Regardless of what you call it, all social currencies have a very unique characteristic that differentiates them from a financial currency. Social currencies reward high integrity and punish low integrity.

Social Currency can be earned or converted:

Organizing a community around a common goal is serving a need that government and corporations do not have to fulfill in their “Social Charter”. So it has value.

  • Helping a neighbor find a job supplants the work of the government funded unemployment office.
  • Helping an elderly neighbor with their shopping supplements the Department of Health and Human Services.
  • Adopting a child alleviates expenditures in the foster care system, abortion, and possibly the courts and prisons.
  • Helping local vendors stay afloat by organizing a community of group buying or groupons reduces the demands on bankruptcy courts and social services.

Social Currency can also be eliminated:

  • Public servants and politicians who squander the trust of their constituents through acts of corruption and impropriety
  • Corporations who decimate local priorities in favor of Wall Street priorities.
  • Breaking the law, endangering others, neglect, fraud, breech of social contract .
  • Consumption far in excess of social contribution.

Take any issue and apply social currency

The health care debate is an excellent example. First, let’s apply a social currency to all of the people voting on the bill. Next, let’s apply a social currency to everyone arguing against the bill. Next, let’s apply a social currency to everyone arguing in favor of the bill. Let that count establish the burden of proof of the argument.

Next, let’s pay for Health Care Reform in social currency, not financial currency. That means people with a surplus of social currency receive health care at a certain rate. People with a deficit of social currency receive health care at a different rate.

Finally, compensation to health care providers would also be biased by a social currency. Providers with a surplus of social currency are paid at a different rate than providers with a deficit of social currency.

What about cheaters?, who pays these subsidies? how do you count it?, It’s a job killer, corporations will go bankrupt, losers still lose, Holy cow, this messes everything up!!!!

Actually, it’s not much different than how we allocate money on a credit scoring basis. It’s not any more difficult to count than the blood-money coursing through the veins of an unvetted financial / insurance system. Most importantly, constraining a Financial Currency with a Social Currency sets up a whole new landscape of benchmarks and incentives that accelerate innovation, in effect, printing new currency.

That’s what I mean when I say; “I’d Like to see some Social Currency in the Mix”


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They’re Finally Saying Something New About Social Media

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On March 8, 2010

In General Information

Yes, we know that social media is humongous. Yeah, we’ve all heard the 10 amazing ways to “fill-in-the-blank”. Nope, you are still not allowed to shove your products down the consumer’s throat until you have earned their trust.

Now, all of a sudden, a new idea is emerging…it’s barely an audible chirp, but it will become a tectonic rumble before long:

Social Media is beginning to take on the characteristics of a Financial Instrument.

This is a stunning development with vast implications. Allow me to interpret this excellent article by the respected visionary, Brian Solis, as a basis for my argument.

One thing that everyone can agree on is that “information”, “knowledge”, and “innovation” are related somehow. The problem is that nobody can agree about exactly how they are related. None of the definitions for these terms include the adjacent terms and no algorithm exists which performs the conversions, until now.

Now comes the interesting observation:

They say that Google ranking represents a proxy for knowledge in a knowledge economy. What they mean to say is that the rate of change of information with respect to time can be used as a proxy for real-time knowledge. This is a valid idea because Google organizes the World’s information based on time rates of change of the Information.

Yet “knowledge” can only exist between the ears of breathing, thinking, creating, and acting human beings – one important component for which Brian expands the term “Social Capital”. If we carry his observation one step upstream, we should be able to also say that the rate of change of Social Capital (a component of “knowledge”) with respect to time is a proxy for real-time innovation.

Now this idea should be pegging seismographs and flooding the Valley with the ensuing tidal wave of glee. The implication is that we can now identify and organize innovation by simply measuring the rate of change of knowledge with respect to time that an enterprise induces among social networks in a market. Alas, we can now see the direct Integration of Social Media into the business plan.

Calculus is the science of change.

Definitions are fluid, they must change. Brian Solis has, in fact, introduced the construction of what scientists call a “differential equation”. Much like “distance, velocity, and acceleration” are all defined as a rate change of their adjacent term, so too will “information, knowledge and innovation” become defined.

Economics is the science of incentives

It should not go unnoticed that Bankers are scientists too and “money, interest rate, and market capitalization” are also related by the same calculus. This makes possible the miracles of capitalization, securitization, insurance, diversification of risk, options, hedge funds, etc… For better or for worse, Wall Street lives and dies by this algorithm and so do we.

Let me repeat; social media is taking on the characteristics of financial instruments.

Please, I hope that I am not alone in celebrating this historic moment. Few people may recognize this now, but mankind has just experienced an evolutionary leap in it’s understanding of it’s own nature. Bravo Brian, Bravo.

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