My TED Talk on the Magic of Crowdfunding
I have a new column on Unreasonable.is, which is where this five part series is published:
- Part 1: The JOBS Act will unlock $30 Trillion in long-term investment capital that can legally be invested in startups and small businesses through crowdfunding portals.
- Part 2: Currently, investors have a stranglehold on the fundraising process. Once the JOBS Act is implemented, there will be a leveling of the playing field in which entrepreneurs and citizen-investors control the process.
- Part 3: Investment crowdfunding enables individuals to invest in companies they are passionate about, and in so doing, outperform professional investors.
- Part 4: “Do you want to sell sugar water for the rest of your life or do you want to come with me and change the world?”
- Part 5: There is a second revolution coming: investing directly in people. When it collides with crowdfunding, this will create a perfect storm….
Here are some things I used to believe:
- The power of the free market comes from competition
- If you are nice to someone, you will be rewarded commensurately
- A penny saved is a penny earned
- The more scarce something is the more valuable it is
I no longer believe these statements to be true. To understand why, I’d like to share a little of my journey as an entrepreneur and investor.
In the mid to late ’90s I was working on a startup and getting my feet wet as an angel investor in Silicon Valley. I, like everyone I knew, was an adherent of the Chicago School of Economics and the Efficient Market Hypothesis. One of the mantras of this religion is that
The invisible hand of the marketplace will feed us all, but we have to compete vigorously with one another for it to work its magic.
Signing a Non-Disclosure Agreement on a first date — that’s not just good business, but a moral …
Adjacent Possible, Alternative Institutions, Competition, Cooperation, Economics, Incentives, Investing, Invisible Etiology, Markets, Scarcity / Abundance, Social Capital, Social Entrepreneurship, TED, Trust , 1
A friend recently commented to me that he was really excited about a new business he was about to undertake, but then added almost apologetically, “I know it’s not much of a social enterprise.” This seemed odd to me because in my experience Jason is as socially/environmentally/interpersonally conscious a person as I know. To me it was obvious: as long as Jason didn’t stray from his own values and ways of being, whatever ventures he undertook would by definition be social enterprise. As always, he would find a way to make sure nobody he interacted with was worse off for it. And if successful, at least a few groups of people (including himself and his investors) would be better off.
I then remembered another colleague who was universally praised by the media and others as being a one-man savior in Haiti after the earthquake. He had quite admirably hit the ground running, on his own initiative, with incredible resources, to set up a refugee camp. …
In what turned out to be the most popular TED talk of all time, Ken Robinson asked us to wake up and smell the coffee: our system of education is stuck in the Industrial Revolution where it was invented. Moreover, it’s killing creativity, crushing spirits, and preparing students, not for success and wellbeing, but rather unemployment and dysfunction. Waiting for Superman confirmed this this, adding that the public schools in the U.S. are bankrupt, both financially and morally.
Yet, all around the world, there are signs that the Berlin Wall of education reform is crumbling. Here are a few shining lights:
No single institution or movement has done more to spark educational change than TED.com. Hundreds of millions of people are watching their videos and learning from inspiring individuals sharing ideas and experiences that cannot be learned in a traditional school environment. And there’s an acceleration effect because many of the talks are about education and the transformation that’s going on in …
[NOTE: I updated this post with more detailed examples]
In the interview with Jon Gunn in Part 3, I mention that I’ve been thinking of what “version 2” of the Personal Investment Contract might look like. Here’s the model:
- Investment Amount – Same as before, intended to give the individual some time to pursue their passion (or figure out what that is) without having to worry about how to support themselves.
- Maximum Return – The cumulative total amount that the investor can receive as return on their investment. If and when this amount is reached, the contract is over.
- Annual Exclusion – The amount of annual income the entrepreneur can make without having to share any of it with the investor.
- Minimum Revenue Share – The minimum percentage of gross income the entrepreneur returns to the investor after deducting the Annual Exclusion.
Following are some examples of various different career paths and uses for a …
I’d also like to thank everyone who threw their hat in the ring and expressed interest in “accelerating possibilities,” as well as those who offered words of endorsement for them. Stay tuned for an open invitation to join a nascent community of like-minded accelerators.…
Are you struggling to pay for your food/home/whatever, or do you know someone who is?
If you can convince someone you are a superstar, there’s a way out. But if you are having trouble making that case, then maybe you’d consider becoming a Social Capital Uncontractor. What’s that, you ask? I’m not sure, I’m making this up as I write, you can help…
Here’s my life. I have a large and growing number of projects that I am working on, and an even larger (and more accelerating) number of projects I’d like to begin. The critical bottlneck for me is not money but time. It’s getting so bad that I don’t have time to even think about the management of these projects, let alone manage them. Plus I hate managing projects and it’s definitely not my biggest strength. I’m much better advising and asking questions that make you think differently.
On the other hand I have many friends, colleagues, acquaintances, etc. who are underemployed, by …
$10K for Crowdsourced X Prizes Platform
- Allows anyone to offer a cash prize for achieving a goal they want achieved
- Allows anyone to pledge additional dollars to someone else’s already-offered prize
- Uses crowdsourcing to vet which goals are worthy of public prize offer and which get top billing
- Uses crowdsourcing to determine if/when a prize gets awarded
- Has been used to award at least five prizes of one thousand dollars or more
- Does not have any pending lawsuits alleging that the platform violates U.S. federal or state laws
- Has an opinion letter from a U.S. law firm that the system does not violate U.S. federal or state laws
Note that this is different from Kickstarter in that (a) it’s the donors who set the goal not the recipient; (b) Kickstarter does not use crowdsourcing in its vetting …
Imagine you are in your early twenties, out of college several years and your best friend, who recently came into an inheritance of $300K cash told you they could think of no better way to invest the money than to invest it in you. Not the company you started, not as a loan, but invest it in YOU, as if you were a startup. In return your friend said all they wanted was 3% of your gross income for the rest of your life. Do you think you would take it?
Now what if your friend said that they didn’t care what you did with the money or how much you made each year. If you wanted to sit on a beach in Nicaragua learning to surf, go work in the Peace Corps, stay at home and do your art projects, …
I just saw the most important talk I have seen in 300+ TED, Pop!Tech, etc talks that I’ve watched. And at the risk of hyperbole, I will say that the worst case scenario is that Daniel Nocera simply wins a Nobel Prize (and yes, I’m willing to bet at even odds that it happens in under 10 years from today). But if the system is able to scale through replication, it will be at least as important as penicillin in terms of ending human suffering and will have a bigger impact on the world as a whole. Here’s why:
- Input: Water (clean, saltwater or dirty water)
- Outputs: Electricity + Pure drinkable water
- By products: nothing (other than what was in the water)
- Resources required to assemble: all abundant and most have substitutes
- Knowledge required to assemble: simple
- Cost to assemble: relatively cheap
Essentially what Nocera has done is reverse engineered and re-created a super-simplified photosynthesis process. It’s a closed loop (i.e. autocatalytic) so …
Alternative Institutions, Energy, Health, Poverty, Scarcity / Abundance, Science, Social Entrepreneurship, Society, Socio-technical systems Alternative Institutions, Energy, Health, Poverty, Scarcity / Abundance, Science, Social Entrepreneurship, Society, Socio-technical systems, 5
Ever wish you could reinvent the entire systems of government you live under without starting a costly war, revolution or having to win an election? No? Well, Patri Friedman has (wondered, that is). And so has a growing number of seasteaders, ordinary folks (and the occasional PayPal billionaire). Or to be more precise, as Patri explained at this year’s Idea Project confab [sign up now for next year, it may sell out quick!] they believe we should at least get to choose from some reasonable options. Currently your choices are some form of democracy, autocracy, or theocracy. And switching costs are high.
What if you wanted to start your own sovereign nation in a tucked away corner of earth somewhere? Problem is, every piece of land more than a few feet above sea level is already claimed by governments, private individuals or commercial interests. Enter, the high seas. Turns out there’s nothing stopping you from going out to international waters, building a platform, giant …
One of the hidden themes of The Feast this past week has been how to scale successful social ventures. This has been on my mind a lot recently as I have been working informally with both Self Enhancement, Inc. (SEI) and Decision Education Foundation (DEF) on this puzzle. SEI is extremely successful in the Portland locale where they began 25+ years ago, achieving 98% high school graduation rate (working against hard socioeconomic realities). Like with many models that are very successful “in the small”, the biggest challenge is to translate that same success to larger scales (e.g. all across America, or all around the world). DEF is attempting to build scalability into its model from the start, and has found that this is extremely challenging.
In thinking about this I am reminded about a duet of innovators who spoke at the Pop!Tech conference last year about scaling. Both Bunker Roy and Paul Polack have some profound lessons to teach us about scalability. You will …
Agency, Alternative Institutions, Autocatalysis, Evolution, Interconnectedness, Interventions, Memes, Models, Philanthropy, Social Entrepreneurship, Socio-technical systems Agency, Alternative Institutions, Autocatalysis, Evolution, Interconnectedness, Interventions, Memes, Models, Philanthropy, Social Entrepreneurship, Socio-technical systems, 8
I’ve been having a serious discussion with two colleagues of mine about closing the gap that exists between two groups:
- People of my generation (40 and older) who have capital they want to invest in innovation but only know the VC for-profit-only value model and don’t have any true view into or understanding of social entrepreneurship business models;
- People coming out of college today (27 and younger) who are actually creating untold value for the world without taking on investors because they don’t (a) know how to attract them, and (b) have heard too many horror stories
Jay and I fall into category 1 and Michael falls into category 2. All three of us agree that the gap above exists — due in part to rapidly declining startup costs — and represents a very real (and lucrative) investment opportunity if it can be closed properly.…
Have you ever heard of anyone selflessly helping out a stranger by buying their house at a bank foreclosure auction and just giving it back to them? Well, now you have.
More likely, you’ve probably heard of private investors taking advantage of the banks’ unwillingness (or inability) to deal with all the bad loans on their books. Like the group of investors in Act 2 of this This American Life episode, you buy a house that’s in foreclosure for a significant discount on its true market value and then “you get the homeowner into either a mortgage they can afford, or they’re able to rent it, or you pay them a bit to move somewhere else.”
Well, what if there was a way to combine these two activities so that you are doing good for someone else while doing well for yourself financially? There are many variants of how this could work, but here’s the basic concept:…
A few articles on the economy that were sent my way recently.
The Good: After Capitalism (Geoff Mulgan)
“The era of transition that we are entering will be disruptive—but it may bring a world where markets are servants, not masters.” I urge you to read this entire article, and leave your ideological biases at the door. Despite the title, this is no polemic. Here’s the punchline:
Contemporary biology and social science has confirmed just how much we are social animals—dependent on others for our happiness, our self-respect, our worth and even our life. There is no inherent contradiction between capitalism and community. But we have learned that these connections are not automatic: they have to be cultivated and rewarded, and societies that invest large proportions of their surpluses on advertising to persuade people that individual consumption is the best route to happiness end up paying a high price.
Culture, Economics, Epistemology, Incentives, Interventions, Limits of Knowledge, Markets, Non-linearity, Scarcity / Abundance, Social Entrepreneurship, Society, Stability Culture, Economics, Epistemology, Incentives, Interventions, Limits of Knowledge, Markets, Non-linearity, Scarcity / Abundance, Social Entrepreneurship, Society, Stability, 1
Oh, and re-grow the rainforrest, strengthen the social, political and economic climate, save endangered species and increase biodiversity and resilliance all at the same time without any budget.…
Alternative Institutions, Climate, Cooperation, Culture, Economics, Education, Interventions, Social Entrepreneurship, TED Alternative Institutions, Climate, Cooperation, Culture, Economics, Education, Interventions, Social Entrepreneurship, TED, 1
Here’s a contest model for spurring innovation that I’d like to explore:
- 50 participatns ante a pre-determined amount of money
- Each participant submits original work (of a pre-determined type)
- Each participant votes for one winner (other than themselves)
- Winner gets the money
I typed “social entrepreneurship tax credit” into Google and the top result was this page on BarackObama.com. There are some good ideas there, and I hope they get implemented once he takes office. But I’d like to see even more.…
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