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A Mint.com for Social Capital

with 131 comments

We are in the middle of one of the largest and fastest macro shifts in world economic history — the development of a social capital infrastructure analogous to the financial infrastructure built over the past five hundred years. Led by the growth of social networks, the value we are building in our personal relationships is becoming more and more comparable to “true” currency. In fact, social capital is coming closer to fully adopting the three core characteristics of money:

Medium of Exchange: It is far easier to reach all of my friends today than it was ten or even five years ago. More importantly, this communication has clear, quantifiable value that I can exchange for other goods. This has never been the case without insane transaction cost in the past.

Store of Value: I can now much more efficiently build, store and display my social capital. Twitter followers do not deteriorate as quickly in value without maintenance as real-life friends.

Unit of Account: The units of social capital have become far more standardized and concrete. Ten years ago it was meaningless to say you have “300 friends”. Today, the Friend (or the LinkedIn connection or the Twitter follower) is a far more meaningful unit of account.

I had the pleasure of joining Emily Hickey and Michael Yavonditte of Hashable for a demo of their product last week. In brief, Hashable turns the transactions of the social capital economy — introductions, breakfasts, lunches, coffees, beers, et cetera — into a game. I get points when I make an introduction or log a meeting in their system, for instance.

Given its check-in and gaming features, It’s tempting to refer to Hashable as “Foursquare for people”. But I think that’s missing the bigger opportunity — a Mint.com for social capital. Social capital isn’t a game any more than my bank account is a game. Sure, it has some game-like elements — it goes up and down in accordance with how well I “play” the game of life — but ultimately it has its most significant meaning outside of the context of any game framework we put around it. And that is where the real world-changing products will be made.

The next generation of successful social products will acknowledge that our social capital is a currency. They will provide tools to enhance our social capital’s functionality as a store of value, a medium of exchange and a unit of account. They will replicate the deep feature set at our hands to deal with money — banking, tracking, exchanging, investing, et cetera — for our connections and relationships. Over the past five years, social networks and the decreasing cost of bandwidth and storage have lowered the transaction costs of social capital exchanges by orders of magnitude. Now, the race is on to provide the best tools and infrastructure around this new currency.

Putting everything in the context of a game is a good way to get quick user traction among a competitive tech community. But social capital isn’t a game, and the biggest companies in the space five years from now will have grown by providing fundamentally useful functionality that helps everyone earn, save, exchange and optimize social capital.

Special thanks to Sam Lessin for helping shape my thoughts on this stuff. If you don’t subscribe to his letter.ly, you are missing some of the most thought-provoking writing in tech today.

Like this? Vote for it on my favorite news site, Hacker News.

Written by Brad Hargreaves

September 19th, 2010 at 1:58 pm

  • Anonymous

    Fair points…perhaps there are different levels of “zero sumness” that need to be defined. In monetary transactions there are certainly gains from trade so in that sense capitalist systems are not zero sum, but within a given negotiation the dynamics are zero sum. If you value a widget at $5 and I value it at $10 then we can both gain from trade anywhere in that range, but if I negotiate you down to $5.05 then I have captured the majority of those gains from you. nnYour example of exchanging tweets is an interesting one. There clearly is an inequity, but the exchange doesn’t cost either party anything so it is difficult to say that either party captured gains from the other. In other words, the follower counts are not negotiable, they are predefined which presents a binary decision to participate in the exchange or not. nnSo perhaps we have a range of possible models with potentially different degrees of these characteristics…

  • Anonymous

    Agree and disagree. I can pay you $100 to send a tweet out to yourrnfollowers, right? You would be selling (or renting) me some social capital.rnOr we could “exchange” tweets by each sending a message out to ourrnrespective followers. And if you have 10,000 followers and I have 1,000,rnthere will be a sense of inequity with respect to the transaction. That is,rnwe are putting quantitative and qualitative characteristics on our socialrncapital to make these transactions easier.rnrnThat said, these aren’t zero sum transactions — but neither are mostrnmonetary transactions. If a farmer sells some potatoes for $100, bothrnparties gain because of the benefits of specialization. Social capitalrnisn’t exactly the same, as you note, but it’s not as different as it seems.

  • Anonymous

    This is a great analysis and I would like to expand on one point and get your thoughts. In most cases social capital will not be and cannot be exchanged in the same way that we do with traditional currency. It cannot be transacted. It wouldn’t make any sense to say that I will trade you some of my influence, or reputation for some of your material goods. I can’t transfer to you some of my twitter followers or my klout score. Social capital will be more thoroughly attached to the individual who created it. Instead of direct exchange, social capital will function to indicate how much value we have delivered in the past and our potential to deliver value in the future. Exchanges will be less zero sum as both parties will demonstrate their value and increase their social capital by working together.nnI have been writing on these ideas recently on my blog, this post is probably most applicable: http://spiralout.posterous.com/examining-gift-economiesnnI am curious to know what you think…n

  • Anonymous

    thanks for the shout out brad :) — i love our conversations, and you know we are in accord on this set — I am only sad you are cuing in the rest of the world ‘for free’ :)

  • Anonymous

    Interesting post Brad. I have been thinking about Hashable as a 4SQ for relationships, although only partially for the game dynamics (it is a natural for creative use of badges). I’m intrigued by the tracking and life-logging elements, and the interesting things one could do with this kind of “check in”.nnRelationships are the lifeblood of business. I remember hearing Harvey Mackay give a sales training talk 15 years ago, and he was obsessive about managing relationships, business cards, etc. That’s why Hashable is so interesting to me — LinkedIn has failed to do anything meaningful with relationships, and while Hashable has a lot of evolving to do, it is treading in interesting territory.nnI’m not sure how literally social capital can be treated as currency. It would be a hugely fun product to design however (lots of unintended consequences to iterate through).

  • Anonymous

    Fair points…perhaps there are different levels of “zero sumness” that need to be defined. In monetary transactions there are certainly gains from trade so in that sense capitalist systems are not zero sum, but within a given negotiation the dynamics are zero sum. If you value a widget at $5 and I value it at $10 then we can both gain from trade anywhere in that range, but if I negotiate you down to $5.05 then I have captured the majority of those gains from you. nnYour example of exchanging tweets is an interesting one. There clearly is an inequity, but the exchange doesn’t cost either party anything so it is difficult to say that either party captured gains from the other. In other words, the follower counts are not negotiable, they are predefined which presents a binary decision to participate in the exchange or not. nnSo perhaps we have a range of possible models with potentially different degrees of these characteristics…

  • Anonymous

    Agree and disagree. I can pay you $100 to send a tweet out to yourrnfollowers, right? You would be selling (or renting) me some social capital.rnOr we could “exchange” tweets by each sending a message out to ourrnrespective followers. And if you have 10,000 followers and I have 1,000,rnthere will be a sense of inequity with respect to the transaction. That is,rnwe are putting quantitative and qualitative characteristics on our socialrncapital to make these transactions easier.rnrnThat said, these aren’t zero sum transactions — but neither are mostrnmonetary transactions. If a farmer sells some potatoes for $100, bothrnparties gain because of the benefits of specialization. Social capitalrnisn’t exactly the same, as you note, but it’s not as different as it seems.

  • Anonymous

    This is a great analysis and I would like to expand on one point and get your thoughts. In most cases social capital will not be and cannot be exchanged in the same way that we do with traditional currency. It cannot be transacted. It wouldn’t make any sense to say that I will trade you some of my influence, or reputation for some of your material goods. I can’t transfer to you some of my twitter followers or my klout score. Social capital will be more thoroughly attached to the individual who created it. Instead of direct exchange, social capital will function to indicate how much value we have delivered in the past and our potential to deliver value in the future. Exchanges will be less zero sum as both parties will demonstrate their value and increase their social capital by working together.nnI have been writing on these ideas recently on my blog, this post is probably most applicable: http://spiralout.posterous.com/examining-gift-economiesnnI am curious to know what you think…n

  • Anonymous

    thanks for the shout out brad :) — i love our conversations, and you know we are in accord on this set — I am only sad you are cuing in the rest of the world ‘for free’ :)

  • Anonymous

    Interesting post Brad. I have been thinking about Hashable as a 4SQ for relationships, although only partially for the game dynamics (it is a natural for creative use of badges). I’m intrigued by the tracking and life-logging elements, and the interesting things one could do with this kind of “check in”.nnRelationships are the lifeblood of business. I remember hearing Harvey Mackay give a sales training talk 15 years ago, and he was obsessive about managing relationships, business cards, etc. That’s why Hashable is so interesting to me — LinkedIn has failed to do anything meaningful with relationships, and while Hashable has a lot of evolving to do, it is treading in interesting territory.nnI’m not sure how literally social capital can be treated as currency. It would be a hugely fun product to design however (lots of unintended consequences to iterate through).

  • Anonymous

    Fair points…perhaps there are different levels of “zero sumness” that need to be defined. In monetary transactions there are certainly gains from trade so in that sense capitalist systems are not zero sum, but within a given negotiation the dynamics are zero sum. If you value a widget at $5 and I value it at $10 then we can both gain from trade anywhere in that range, but if I negotiate you down to $5.05 then I have captured the majority of those gains from you. nnYour example of exchanging tweets is an interesting one. There clearly is an inequity, but the exchange doesn’t cost either party anything so it is difficult to say that either party captured gains from the other. In other words, the follower counts are not negotiable, they are predefined which presents a binary decision to participate in the exchange or not. nnSo perhaps we have a range of possible models with potentially different degrees of these characteristics…

  • Anonymous

    Agree and disagree. I can pay you $100 to send a tweet out to yourrnfollowers, right? You would be selling (or renting) me some social capital.rnOr we could “exchange” tweets by each sending a message out to ourrnrespective followers. And if you have 10,000 followers and I have 1,000,rnthere will be a sense of inequity with respect to the transaction. That is,rnwe are putting quantitative and qualitative characteristics on our socialrncapital to make these transactions easier.rnrnThat said, these aren’t zero sum transactions — but neither are mostrnmonetary transactions. If a farmer sells some potatoes for $100, bothrnparties gain because of the benefits of specialization. Social capitalrnisn’t exactly the same, as you note, but it’s not as different as it seems.

  • Anonymous

    This is a great analysis and I would like to expand on one point and get your thoughts. In most cases social capital will not be and cannot be exchanged in the same way that we do with traditional currency. It cannot be transacted. It wouldn’t make any sense to say that I will trade you some of my influence, or reputation for some of your material goods. I can’t transfer to you some of my twitter followers or my klout score. Social capital will be more thoroughly attached to the individual who created it. Instead of direct exchange, social capital will function to indicate how much value we have delivered in the past and our potential to deliver value in the future. Exchanges will be less zero sum as both parties will demonstrate their value and increase their social capital by working together.nnI have been writing on these ideas recently on my blog, this post is probably most applicable: http://spiralout.posterous.com/examining-gift-economiesnnI am curious to know what you think…n

  • Anonymous

    thanks for the shout out brad :) — i love our conversations, and you know we are in accord on this set — I am only sad you are cuing in the rest of the world ‘for free’ :)

  • Anonymous

    Interesting post Brad. I have been thinking about Hashable as a 4SQ for relationships, although only partially for the game dynamics (it is a natural for creative use of badges). I’m intrigued by the tracking and life-logging elements, and the interesting things one could do with this kind of “check in”.nnRelationships are the lifeblood of business. I remember hearing Harvey Mackay give a sales training talk 15 years ago, and he was obsessive about managing relationships, business cards, etc. That’s why Hashable is so interesting to me — LinkedIn has failed to do anything meaningful with relationships, and while Hashable has a lot of evolving to do, it is treading in interesting territory.nnI’m not sure how literally social capital can be treated as currency. It would be a hugely fun product to design however (lots of unintended consequences to iterate through).

  • Anonymous

    Fair points…perhaps there are different levels of “zero sumness” that need to be defined. In monetary transactions there are certainly gains from trade so in that sense capitalist systems are not zero sum, but within a given negotiation the dynamics are zero sum. If you value a widget at $5 and I value it at $10 then we can both gain from trade anywhere in that range, but if I negotiate you down to $5.05 then I have captured the majority of those gains from you. nnYour example of exchanging tweets is an interesting one. There clearly is an inequity, but the exchange doesn’t cost either party anything so it is difficult to say that either party captured gains from the other. In other words, the follower counts are not negotiable, they are predefined which presents a binary decision to participate in the exchange or not. nnSo perhaps we have a range of possible models with potentially different degrees of these characteristics…

  • Anonymous

    Agree and disagree. I can pay you $100 to send a tweet out to yourrnfollowers, right? You would be selling (or renting) me some social capital.rnOr we could “exchange” tweets by each sending a message out to ourrnrespective followers. And if you have 10,000 followers and I have 1,000,rnthere will be a sense of inequity with respect to the transaction. That is,rnwe are putting quantitative and qualitative characteristics on our socialrncapital to make these transactions easier.rnrnThat said, these aren’t zero sum transactions — but neither are mostrnmonetary transactions. If a farmer sells some potatoes for $100, bothrnparties gain because of the benefits of specialization. Social capitalrnisn’t exactly the same, as you note, but it’s not as different as it seems.

  • Anonymous

    This is a great analysis and I would like to expand on one point and get your thoughts. In most cases social capital will not be and cannot be exchanged in the same way that we do with traditional currency. It cannot be transacted. It wouldn’t make any sense to say that I will trade you some of my influence, or reputation for some of your material goods. I can’t transfer to you some of my twitter followers or my klout score. Social capital will be more thoroughly attached to the individual who created it. Instead of direct exchange, social capital will function to indicate how much value we have delivered in the past and our potential to deliver value in the future. Exchanges will be less zero sum as both parties will demonstrate their value and increase their social capital by working together.nnI have been writing on these ideas recently on my blog, this post is probably most applicable: http://spiralout.posterous.com/examining-gift-economiesnnI am curious to know what you think…n

  • Anonymous

    thanks for the shout out brad :) — i love our conversations, and you know we are in accord on this set — I am only sad you are cuing in the rest of the world ‘for free’ :)

  • Anonymous

    Interesting post Brad. I have been thinking about Hashable as a 4SQ for relationships, although only partially for the game dynamics (it is a natural for creative use of badges). I’m intrigued by the tracking and life-logging elements, and the interesting things one could do with this kind of “check in”.nnRelationships are the lifeblood of business. I remember hearing Harvey Mackay give a sales training talk 15 years ago, and he was obsessive about managing relationships, business cards, etc. That’s why Hashable is so interesting to me — LinkedIn has failed to do anything meaningful with relationships, and while Hashable has a lot of evolving to do, it is treading in interesting territory.nnI’m not sure how literally social capital can be treated as currency. It would be a hugely fun product to design however (lots of unintended consequences to iterate through).

  • Anonymous

    Fair points…perhaps there are different levels of “zero sumness” that need to be defined. In monetary transactions there are certainly gains from trade so in that sense capitalist systems are not zero sum, but within a given negotiation the dynamics are zero sum. If you value a widget at $5 and I value it at $10 then we can both gain from trade anywhere in that range, but if I negotiate you down to $5.05 then I have captured the majority of those gains from you. nnYour example of exchanging tweets is an interesting one. There clearly is an inequity, but the exchange doesn’t cost either party anything so it is difficult to say that either party captured gains from the other. In other words, the follower counts are not negotiable, they are predefined which presents a binary decision to participate in the exchange or not. nnSo perhaps we have a range of possible models with potentially different degrees of these characteristics…

  • Anonymous

    Agree and disagree. I can pay you $100 to send a tweet out to yourrnfollowers, right? You would be selling (or renting) me some social capital.rnOr we could “exchange” tweets by each sending a message out to ourrnrespective followers. And if you have 10,000 followers and I have 1,000,rnthere will be a sense of inequity with respect to the transaction. That is,rnwe are putting quantitative and qualitative characteristics on our socialrncapital to make these transactions easier.rnrnThat said, these aren’t zero sum transactions — but neither are mostrnmonetary transactions. If a farmer sells some potatoes for $100, bothrnparties gain because of the benefits of specialization. Social capitalrnisn’t exactly the same, as you note, but it’s not as different as it seems.

  • Anonymous

    This is a great analysis and I would like to expand on one point and get your thoughts. In most cases social capital will not be and cannot be exchanged in the same way that we do with traditional currency. It cannot be transacted. It wouldn’t make any sense to say that I will trade you some of my influence, or reputation for some of your material goods. I can’t transfer to you some of my twitter followers or my klout score. Social capital will be more thoroughly attached to the individual who created it. Instead of direct exchange, social capital will function to indicate how much value we have delivered in the past and our potential to deliver value in the future. Exchanges will be less zero sum as both parties will demonstrate their value and increase their social capital by working together.nnI have been writing on these ideas recently on my blog, this post is probably most applicable: http://spiralout.posterous.com/examining-gift-economiesnnI am curious to know what you think…n

  • Anonymous

    thanks for the shout out brad :) — i love our conversations, and you know we are in accord on this set — I am only sad you are cuing in the rest of the world ‘for free’ :)

  • Anonymous

    Interesting post Brad. I have been thinking about Hashable as a 4SQ for relationships, although only partially for the game dynamics (it is a natural for creative use of badges). I’m intrigued by the tracking and life-logging elements, and the interesting things one could do with this kind of “check in”.nnRelationships are the lifeblood of business. I remember hearing Harvey Mackay give a sales training talk 15 years ago, and he was obsessive about managing relationships, business cards, etc. That’s why Hashable is so interesting to me — LinkedIn has failed to do anything meaningful with relationships, and while Hashable has a lot of evolving to do, it is treading in interesting territory.nnI’m not sure how literally social capital can be treated as currency. It would be a hugely fun product to design however (lots of unintended consequences to iterate through).

  • http://giffconstable.com giffc

    Interesting post Brad. I have been thinking about Hashable as a 4SQ for relationships, although only partially for the game dynamics (it is a natural for creative use of badges). I’m intrigued by the tracking and life-logging elements, and the interesting things one could do with this kind of “check in”.nnRelationships are the lifeblood of business. I remember hearing Harvey Mackay give a sales training talk 15 years ago, and he was obsessive about managing relationships, business cards, etc. That’s why Hashable is so interesting to me — LinkedIn has failed to do anything meaningful with relationships, and while Hashable has a lot of evolving to do, it is treading in interesting territory.nnI’m not sure how literally social capital can be treated as currency. It would be a hugely fun product to design however (lots of unintended consequences to iterate through).

  • sam lessin

    thanks for the shout out brad :) — i love our conversations, and you know we are in accord on this set — I am only sad you are cuing in the rest of the world ‘for free’ :)

  • http://spiralout.posterous.com/ GregoryJRader

    This is a great analysis and I would like to expand on one point and get your thoughts. In most cases social capital will not be and cannot be exchanged in the same way that we do with traditional currency. It cannot be transacted. It wouldn’t make any sense to say that I will trade you some of my influence, or reputation for some of your material goods. I can’t transfer to you some of my twitter followers or my klout score. Social capital will be more thoroughly attached to the individual who created it. Instead of direct exchange, social capital will function to indicate how much value we have delivered in the past and our potential to deliver value in the future. Exchanges will be less zero sum as both parties will demonstrate their value and increase their social capital by working together.nnI have been writing on these ideas recently on my blog, this post is probably most applicable: http://spiralout.posterous.com/examining-gift-economiesnnI am curious to know what you think…n

  • http://bhargreaves.com/ Brad Hargreaves

    Agree and disagree. I can pay you $100 to send a tweet out to yourrnfollowers, right? You would be selling (or renting) me some social capital.rnOr we could “exchange” tweets by each sending a message out to ourrnrespective followers. And if you have 10,000 followers and I have 1,000,rnthere will be a sense of inequity with respect to the transaction. That is,rnwe are putting quantitative and qualitative characteristics on our socialrncapital to make these transactions easier.rnrnThat said, these aren’t zero sum transactions — but neither are mostrnmonetary transactions. If a farmer sells some potatoes for $100, bothrnparties gain because of the benefits of specialization. Social capitalrnisn’t exactly the same, as you note, but it’s not as different as it seems.

  • http://spiralout.posterous.com/ GregoryJRader

    Fair points…perhaps there are different levels of “zero sumness” that need to be defined. In monetary transactions there are certainly gains from trade so in that sense capitalist systems are not zero sum, but within a given negotiation the dynamics are zero sum. If you value a widget at $5 and I value it at $10 then we can both gain from trade anywhere in that range, but if I negotiate you down to $5.05 then I have captured the majority of those gains from you. nnYour example of exchanging tweets is an interesting one. There clearly is an inequity, but the exchange doesn’t cost either party anything so it is difficult to say that either party captured gains from the other. In other words, the follower counts are not negotiable, they are predefined which presents a binary decision to participate in the exchange or not. nnSo perhaps we have a range of possible models with potentially different degrees of these characteristics…

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