Most web tools that are re-shaping commerce are doing one thing, handing over control to the users from the producers. They are democratizing the factors of production so that anyone with access and ideas can now play. They do this through cutting out two things that existed and thrived in the industrial era: middle men and gate keepers. The power of collaboration has been touted as a revolution consistently since the the word web 2.0 exited the mouth of Tim O’Reilly. I think it is entirely justified. This is particularly the case with the latest disruptor to emerge – crowd funding. The reason that funding our projects from the crowd changes everything, is because it doesn’t really change anything.
All things have always been funded by the crowd, we just didn’t know it before.
To bring this idea to life let’s consider a couple of examples:
Debt funding via banks is a form of crowd funding: They take our deposits, assess and carry the risk of ‘sub-letting’ our deposits on margin. Essentially banks make money from crowd funding projects and managing the organisation of it.
Capital raising via VC firms is a form of crowd funding: They take large portions of their venture money from Superannuation or 401K funds which has been allocated to ‘high risk’ investments. This is typically between 1-5% of the total asset allocation. Again, our money is being allocated in our behalf from which transaction profit margin is made.
The point is that pretty much every type of investment that involved aggregated money, has always been the money of the ‘audience’ hidden within a structured system. A system which we are now re-structuring with deomcratised tools so that we can organise our capital amongst ourselves. So that we can access each others funds without permission from financiers. So that we can decide what is worth funding. So that we can make the margin available on float capital. And this is just the start of the inevitable changes to the financial system.
The very truth about crowd funding is that before it arrived in its current ‘web organised’ form – we got locked out of the system that our money funded. And it feels like crowd funding of micro projects is just the begging of something much bigger and more important. The question for aspiring entrepreneurs is how can we disrupt the finance industry further with newly connected commercial eco systems?
The biggest flip the technology age has done on the industrial era is the open API. For the uninitiated, an open API (Application Program Interface) is a word used to describe sets of technologies that enable websites to interact with each other. It is also a system where web companies ‘open up’ their platform for external non affiliated software developers to create applications on. Facebook most famously did this with their ‘Facebook Platform‘.
While this sounds like some kind of nerd nirvana, it is actually a counter intuitive move that forms a large part of the marketing genius of social web 2.0 applications. And that is outsourcing the R&D to total strangers. That is, entrepreneurs who have new and interesting ways to mash up their content. It is quite revolutionary in fact. Corporations from the pre-web industrial era would rarely let people use their logo, let alone open up part of the factory for hackers to come in and try and build something interesting. But this is exactly what is happening, the most amazing stuff is usually coming from external organisations and the entire ecosystem is the beneficiary.
- Existing web companies get their new product development for free
- Entrepreneurs get a shot at being acquired by the firms whose API they focus on
The open API idea has to be one of the major reasons why technology companies are eating the world. The only question remaining is why don’t old world industrial companies open up their doors to some new, fresh and external innovation?
So how do we leverage a human revolution from a commercial perspective? It’s a big question. And even though the web has gone a long way in deconstructing power bases, business and human evolution are still inextricably linked. So I thought I’d post a few things that matter in a digital world so all players (people and commerce) can create value for each other simultaneously.
Rules of engagement
- Authenticity pays. Be real, don’t pretend to be something, or someone your not. Brand respect comes from understanding the rules and respecting the on line world as the real world and vice versa.
- Speak with a human voice. We don’t listen to Corpi-speak. We listen to voices from people. We ten must personify our brands.
- Engage the crowd. They own our brands. You want proof. When they stop feeding our brand (buying) it dies. We must pay the respect the real brand owners deserve. It’s always been this way, but we didn’t know…. because we couldn’t hear their voices. Now they they have a voice, we must act on it. We have to let our people hijack our brands. User Generated Content and Crowd Sourcing is where it’s at.
- Compound effort. Benefits take longer to garner in the new world. It’s not like the old days of a large media campaign with instant results. We are moving from a low human capital, high financial capital environ, to a large human capital, low financial capital world.
- Learn on the job – it can’t be strategized. It’s too unorganized and changeable… the web is humanity in digital form. Then they only way to play is to embrace the chaos and be part of the conversation. It can’t be justified to a board room, but the companies and brands who choose not to play will be wondering what happened a few short years from now.
Most of all, have fun doing it.
Quick advice. #1 Tip for selling a vision ?
So I thought it was worth sharing the answer here because the answer had to be delivered in less than 140 characters.
It’s about their vision, not yours. You need to demonstrate what’s in it for them. Not you. Let them own it. Perceived co creation.
Humans are compelled to count. We count everything. Days, weeks, months, years, birthdays, money in the bank, salary levels, years of experience. It’s part of the human condition, maybe it helped us evolve to a civilised existence .
As startup entrepreneurs we need to let our people count something. Whether it’s the savings they made or they friends they have, there needs to be a way for them to keep track. So our people know they have made progress. Commerce is an anthropological game of football. So we must keep score. But it must go beyond the corporate scoreboard of profit, share price, turnover, number of employees… it has to be an audience focused score. Like followers on twitter. It has to be about them, not us, it’s how humans roll.