The proverbial “all-you-can-eat” business model works great for some products and not-so great for others.  The opportunity, of course, is to be able to transform non-viable business methods into viable one’s using social media tools and data.  In this article, we explore how the AYCE model can be improved.

Netflix for the Sky

The Netflix model for movies has been touted as one of the greatest business innovations in the modern era of technology – not because it is new, but because it works.  Now, consider that the AYCE model has been applied to transportation, club membership, and telecommunication (cell phone data plans), etc.  Some work better than others….

I found this recent article about American Airlines experience with the AYCE model – which became their worst nightmare.  In 1981, you could buy a lifetime all access pass to first class travel on United Airlines for 250,000 dollars. While touted as a good way for AA to raise a lot of quick money, it proved to have long term liabilities that far outstripped the performance of the fund raising.  Today, a small carrier called Surf Air is now trying to use a subscription based system on a limited circuit using executive turboprop aircraft.

What is the comparable human behavior?

AYCE models impact human behavior in often unpredictable (read “unprofitable”) ways.  We’ve seen the unlimited plan for cell phones becoming a thing of the past.  Taxi drivers have not yet introduced the subscription travel plan but certain bus routes and commuter modes lend themselves to unlimited passes where an alternate single use rate and behavior record can be used as a price comparison.

I recall a wise and successful colleague in the insurance business revealed the dark truth about unlimited subscriptions.  “They are like extended warranties, the only people who should actually buy extended warrantee are those who fully intend to beat the crap out of the item that they are covering”.  Like gym subscriptions, low use members are needed to subsidize high use members.

Simulated Economy

Another way to simulate the effect of an unlimited prescription without leaving the business with an unmanageable long-term liability is to create an option-like instrument.  The buyer would hold the right without the obligation to purchase the service at a discount during a specific period of time where behavior will be regulated by market forces.

Holding the option would be priced relatively cheap so that the buyer does not feel a deep loss for not exercising the option, yet sufficient to subsidize the activity of those who do exercise the option for discounted service.  Another feature is that the option can be traded allowing holders to build a proto-economy around the asset that they possess.    This would decrease the marketing costs of the provider as the price of the options floats to meet the needs of the market.

These strategies are commonplace on Wall Street but a statistical construct for their deployment on Main Street may be emerging.  New “platforms” will arise which produce and  aggregate data in the right format to support an options type of instrument for the trade or exchange of any number of goods and services in a non-cash environment.

Maybe the all-you-can-eat buffet of the future will resemble a cornucopia of options for assets that everyone shares.  Bon Apetite.


Teachers are “threatened” with layoffs. In some cases, the profession is openly mocked. Meanwhile, corporations are staring blankly at the knowledge gap in their industries.  The older generation is retiring, moving on, and taking their knowledge with them.  Teacher’s unions are busted and disappearing. Apprenticeships are a thing of the past.  Everyone is asking “where are the jobs – there is plenty of work to do”

Education is obviously a financial instrument.  Think about that for a minute – it is an investment like any other investment. Wall Street has an arbitrage instrument for every market anomaly – why not education?

What would happen if teachers were given an equity position in their students?  Isn’t this what families do to prepare their kids to take over the family business?  Isn’t this what happens in corporations where executives pick proteges?  Isn’t this what happens in politics where knowledge is traded among a closed group?

A school like Harvard University or MIT certainly hold and equity position in their students. What if every community viewed every child as an asset instead of a liability?


Editorialized Economics

Social media used to be so cool – a way to bypass the mediated reality of editorialized content. Real people coming back with real ideas and real opportunities from the crystal clear waters of cooperative community. Then legacy media and their ad-rev departments started to wonder “Hey, where did everyone go?” Marketer started saying, “Hey, these CPM numbers are F***ed – something is cutting into our pie ?!?!?”

Then came the Social Media Gurus

like the tattle-tale kid brother intent on spoiling a perfectly good game of hide and seek, screeching: “There they are, there they are!!!….Can you see ’em?…see, see, your customers are hiding in the shadows… there, in the shadows….quick!!! Can you see ’em now?.  By the way, pay my fee, buy my book, and did I mention my latest ‘keynote’ yet?”

Next, the Gurus went mainstream as legacy media analysts!! Legacy media picked up the ball on the run-away ad spend. They glossed poetic on the “effects” but not the “causes” of social media. And, OH Gawd, what a nuisance all those pesky bloggers are to the dignified art and science of professional journalism.

A Monster was Born

Facebook declared that people really want to share their personal details with the world, and a monster was born. So now we are stuck with Corporate Media on steroids.  Your data are scraped so they can find you. Images are reproduced infinitely. Lies and deception grow legs half way around the world before the truth can even be awakened from it’s slumber. Say one thing wrong and it haunts you forever.

Casualty or Causality

Social Media has become another casualty of the broken financial system where people fight for artificial scarcity.  It is no longer a means to empower and enlighten, it is becoming another means to exploit and oppress.   Special recognition goes out to all the so-called social media gurus. I can’t blame them though, everyone has the right to make an honest living.

Call it tattle-tale economics


Gambling with Jobs

The US Senate recently blocked a measure designed to reduce the outsourcing of US jobs that many corporations pursue in the relentless drive to reduce costs.

Modern Globalization is a system

Globalization must be analyzed like a system. Data, Information, knowledge, Innovation, and wisdom are profoundly related in a system. If you take away one of the components, the others become worthless.  If you destroy one component, the entire structure could fail.

Everyone knows that data, information, knowledge, innovation, and wisdom are related.  If I corrupt the data, then the associated information, knowledge, innovation, and wisdom are also corrupted.  Likewise, if I eliminate any of these elements, the system fails.

Focus on Core competency – what core?

The standard argument for outsourcing is that knowledge workers are better allocated in innovation jobs so “we can better focus on our core – and heck, we can all save a little dough in the process”.  But when we outsource our knowledge economy, the innovation economy is choked off.    The knowledge economy is the source of the Innovation Economy.  The Knowledge economy is also the recipient of the information economy which transforms data and information into useful tools, ideas, and products.

Rate Of Change is Innovation

The rate of change of the innovation economy is directly proportional to the INCREASE not the OUTSOURCING of the knowledge economy.  This is the calculus of outsourcing.  If, on the other hand, it is in you best interest to keep a population poor, weak, and unable to organize into powerful collectives, then yes, outsourcing is an effective method.


Future of Banking

When I use the term “Innovation Bank”, people conjure up the image of a cheery place where anticipation reigns as starry eyed depositors arrange their intellectual property in neat cubby boxes, Patents fly like cash register receipts and companies troll the halls looking for a cure for their bottom line blues.

This is not exactly what we have in mind, nor is it too far off either. An innovation Bank is simply a knowledge inventory that contains knowledge assets that exists in the format of a financial instrument and can be deployed for the purposes of increasing productivity.  In the process, it makes 10X more of itself every time it is deployed.  It mints its own money.

The Innovation Banker

This is not much different than a financial bank. In fact, in the financial bank, everyone assumes the borrower has the knowledge to execute the business plan and the bank lends the money. Oh, by the way, the money makes more of itself  10X over (fractional reserve system) every time it is deployed.

With the innovation bank, everyone assumes the entrepreneur has the money to execute the plan, and the seek to borrow the knowledge. Other than that, they can be considered identical. The key is in the scope, depth, and format in which the knowledge assets live in a community as well as the ability to track and preserve the creation of new knowledge in a community.  An innovation banker is a knowledge banker

A Virtuous Circle

Together with the financial banking, these two system engage in the dance of the virtuous circle of innovation enterprise. Apart, they collapse into the swirling cesspool of eternal debt and infinite interest (pun intended).

Ingenesist.com

Music by Phil Felicia


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.


Innovation is currently defined as “A new idea that has a favorable economic outcome”.  The problem is that nobody can solve one equation with two unknowns, i.e., what’s a new idea? and what’s the economic outcome?  By this definition, you can only identify innovation after it has occurred.  So, it’s not very useful – in fact, it is a tragic definition and it must be scrapped immediately.

The trick is to identify the new ideas and direct them to the appropriate economic outcome, not the other way around as many companies and agencies try to do.  Most good ideas can’t find a place to be profitable in a silo, so they are scrapped. This is not the fault of talent or the idea, but invariably both are lost.

The existing definition of innovation is insufficient for use as a way to identify innovation in the present. There is no way to build an innovation economy upon a flawed definition and unpredictable value of innovative activity. This new interpretation will allow innovation to properly behave like a financial instrument.


The term IPO conjures images of empire-making where a hot young company with a great product offers pieces of its future-self for sale to the public as a means of raising money without incurring debt.  The money is then used to create the next titan whose new jolt of growth is shared with all who participated.

Today, every annual report to shareholders touts the great team of people whose social, creative, and intellectual capital make it all happen, the worthy and stoic investors whose vision drives sound decisions, and the legions of happy customers who make it all worthwhile.

Essentially, an IPO is people buying into the productivity of other people.

Yet, the IPO is a strict and complex legal and regulatory maneuver that establishes property rights on these small pieces of future productivity – represented by “stock” in the company.

There are underwriters (usually a bank), battalions of lawyers, the securities and exchanges commission (SEC), brokers, insurers, re-insurers, institutional investors, private investors, and retail investors.  There is a full infrastructure supporting the facts of incorporation, disclosure, accounting, and proper management of internal “inside” information.  And, of course, there is a media /PR campaign.  All are integrated to keep the game fair, yet viable.

In the Age of Social Media

I could be wrong but it seems that such vast infrastructure appears a bit awkward if the end result is simply for people to buy into the productivity of other people.  This happens everyday in Social Media.  At some point, we really need to ask; why can’t an individual or a group of individuals raise money without incurring debt like corporations can?

In Social Media, people own and deploy their relationships,  communities, motivation, their knowledge, creativity, intellect, mentorship, leadership, teamwork, their network, and even their ability to form corporations – people own their time.  Social currency is backed by the scarcity of time and the availability of surplus knowledge.

All of the structural components of the financial system are appearing in an analogous form in social media; social vetting, social gaming, aggregation, influence, knowledge inventories, communities of knowledge assets, local social, global social, tag search, deep search, semantic search, stream of consciousness search, geolocation, mobile computing, multi-media, and many more innovations are being created and deployed everyday which literally serve the functions of banks, lawyers and legislation in an invisible economy.

The Ingenesist Project tries to string this all together with just enough specificity so that an alternate financial system will jump start itself and become both visible and available to everyone.

We’ll hold an IPO for Humanity

All of the infrastructure and the potential for people to produce things would remain intact regardless of what happens to the currency.  Think about what would happen if all the dollar based money system evaporated. The only safe haven for the storage and exchange of value will be in people and their communities.

The only thing missing is a system that can articulate social capital, creative capital, and intellectual capital instead of land labor and financial capital.  This system can be built today.


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


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.