The Ingenesist Project » communities

Social Capitalism and The Innovation Bond

Dan Robles — Wed, 18 Aug 2010 09:00:33 +0000

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.

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Material based on video series here

The Devaluation of Social Currency

Dan Robles — Fri, 21 May 2010 19:00:41 +0000

There is a great deal of conversation about collaborative environments built on trust and engagement within corporations or across corporate relationships. The problem is that when layoffs come around, people will throw each other under the bus.

It reminds me of the old backward tipping demonstration where the team dynamics leader would have everyone fall backwards into the arms of their co-workers to demonstrate “letting go” and trusting thy colleague.

People who “Let Go” … get let go

I’ll spare you the dissertation on Capitalism, competitive markets, and all those nifty sports analogies; the dichotomy is that people are held captive within a corporation and are constrained by the corporation – when they leave, they are invisible to the world. The unfortunate side affect is that they are invisible to their communities as well.

We’re all “Derivatives”

Today, human knowledge is mapped relative to the corporation and not relative to their peers or their open community. The value of human knowledge is derived from the value of the corporation. People are not mapped to their complementary knowledge assets in a community. Intangible assets are estimated to represent 70 percent of the value of a corporation in dollars. But, by definition, they represent 100% of the value of the community – and the trade an invisible social currency.

Corporate Bias

If tangible assets are counted with a financial currency, intangible assets must be counted using an intangible currency. It would seem that there would be a high incentive to put a true “Par” value on knowledge assets and apply a clear understanding to intangible currencies.

Instead, social currencies are caste against the wall of the corporation as a means of ascertaining value. In this light, social values appear as a function of the corporation, not the community. This is the corporate bias.

The Devaluation of Communities

It is typical for a country to respond to hyper inflation with a simple reboot of the the economy by dividing the entire financial system by 1000. For example; Mexico once had a “peso”. Then after their devaluation in the 1970′s, came the nuevo peso = 1/1000 of a peso. So if you had cash. you lost it. But if you carried debt, you were able to erase it. The end game is a mad rush to have equal parts debt to assets, so the system would reboot itself with no net effect on people with ability to access credit.

A financial currency devaluation is, in effect, a transfer of social value. A currency devaluation is the invisible process of “harvesting social currency” from people and transforming it to financial currency. When people are kept below a certain economic level, they fail to organize their communities.

What if everyone were a corporation?

But consider this, Social Currency may be undervalued as much as 1:000 against the dollar. As such, a 50 Trillion dollar debt obligation becomes a manageable 50 billion dollar debt obligation if accounted in social currency.

What are the alternatives

This post is not some big-government-socialist-manifesto – something different will happen this time. Social capitalism is capitalism in occurring with minimum Government AND minimum Corporate influence.

Social media is organizing people around a substrate of social internet applications. These applications are not perfect but they are getting better. Eventually, the pillars of the financial system will be duplicated in social media and an alternate financial system will form in parallel.

Calculating The ROI of Social Media

Dan Robles — Mon, 18 Jan 2010 09:00:54 +0000

This video introduces a new way of looking at social media valuation. People find value in social media otherwise they would not do it. How is that value expressed as a financial instrument? If you engage your clients in the same currency that they are trading among themselves, the greater the likelihood you will realize the value of the new media phenomenon.