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Tag: social profit

The Flight Of The New Entrepreneur

Structural Folds: Generative Disruption in Overlapping Groups

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

Social Contract Broker

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

Trust economics and an open economy are mutually exclusive.

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

A Different Approach

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

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

The Social Flights Manifesto

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

The Social Broker’s Commission: Social Profit

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

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

The 3 Steps To Social Profits

I have been approached by many brilliant social entrepreneurs in recent weeks.  They each have several things in common. Each has an incredibly creative idea and a strong passion linked to a deep seated observation that social currency has value.  As nebulous as that may sound, it is very real, specific, and clear in the minds of those who I’ll call, The New Entrepreneur.

Nothing Economic can happen until two or more people get together to build something.  Likewise, when two or more people get together to build something, economic things happen. The objective of this post is to demonstrate the 3 underlying actions of a new class of business plans that will become dominant in the next economic paradigm.

Our recipe is simple:

Step one: convert financial currency into social currency

Step two: Create value denominated in social currency

Step three: Convert new social currency back into financial currency – if needed

This simple recipe forms the basis of the business plans for several start-ups including Social Flights and The Social Value Network as well as numerous other projects that we consult to in the US, Greece, Brazil, Australia, China, and Mexico.

So here is how it works

The Old Business Model:  Suppose you buy a truck and you use it to haul stuff for your own personal and business interests. After 5 years, you can sell the truck for about 1/2 what you paid for it.

The New Business Model: Suppose that you buy a truck to hauls stuff for your own personal or business interests.  Suppose that you also let The Boy Scout troop leader borrow it to pick up christmas trees for sale.  Suppose you let the Kiwanis use it to pick up supplies for their annual salmon bake.  Suppose you let the YWCA haul donated furniture to their satellite facility.  Suppose you help your neighbor use it for a home improvement project.  After 5 years, you sell the truck for about 1/2 of what you paid for it.

The difference is that now your community is engaged with your personal interests.  You have converted financial capital into social capital and created new value denominated in social currency.  One notable example includes Neighborgoods, but there will undoubtedly be thousands of variations of this leveraging every conceivable physical asset.

Now, how do you transform this back social capital into financial capital?   Well, that’s what the emerging science of Social Capitalism is all about.  Social Profit is like a fungible option with a face value.  If structured correctly, an option can have a face value equal to the difference between discount and full price. That face value can be traded like money.  When you are engaged in a community, people know who you are, they trust you and they share with you.  People are trading options – the right without the obligation to exercise a financial position in the future.

Options have real value as an asset if you have them or as a liability if you don’t

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