Archive for the ‘sociology’ tag
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.
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There have been a lot of words flying around recently about why the NY startup scene is starting to get real traction and attention. Today, Stowe Boyd at True/Slant launched Hotbed, a new blog covering the NY tech scene. In his inaugural post, he claims that smart early-stage investors were the missing ingredient in the NYC startup world until this point. I’m sure David Rose is thrilled about that.
Later today, Matt Mireles, who has been making a bit of a name for himself recently, fired back with a claim that entrepreneurs are at the core of NYC’s tech renaissance and investors are just along for the ride.
The emergence of industries in particular cities is a complex problem that has been studied at length by economists and policy experts, of which I am neither. But it still seems like a massive oversimplification to claim that a certain group of people showed up one day and decided to make things happen. If that were the case, it absolutely begs the question of why it didn’t happen sooner. It’s all related — money follows companies and companies follow money, and I don’t believe that one really gets too far out of balance with the other on a local scale.
But that doesn’t mean the volume of investors (or entrepreneurs) doesn’t matter. In fact, a large startup network is particularly important for New York, a city with notoriously siloed industries. In the past, media guys didn’t talk to finance guys, tech wonks didn’t talk to policy wonks, creatives didn’t talk to quants, et cetera. If you showed up at a startup event, finding someone you knew was tough — and it was even tougher to find someone who had a broad base of connections and could introduce you to someone helpful.
This is distinct from the Bay Area, where the volume and density of people interested in startups created a very tight social network. If you were a, say, entrepreneur in New York from Conde Nast working on a startup in the fashion industry, it was tricky to meet the right people in the tech world. There were few “connectors”, since there were simply fewer people to connect — entrepreneurs, investors, executives, engineers, service providers and such. The connectors that did exist — for example, guys in NY Angels — were fairly inaccessible, as angel investors are wont to be.
Thus, the emergence of “smart early-stage investors” is important. But it’s important because they are bringing social capital to the table, not financial capital. First Round Capital could do zero deals in New York over the next 12 months and they would still have a major impact on the NY startup scene because they’re paying Charlie O’Donnell to hang out in the Ace Hotel Lobby and chat with any entrepreneur who walks up to him. Charlie and the rest of the emerging investor class in NYC are guys who can and will connect the finance guys to the media guys, the tech wonks to the policy wonks and the creatives to the quants. And that’s huge.
And let’s not forget the entrepreneurs. As I wrote a week or so ago, the Celebutante Entrepreneur is a dying breed in New York City. And that’s a great thing for entrepreneurs, as celebrities are (almost by definition) inaccessible. I couldn’t go to Julia Allison for advice about getting my startup incorporated, nor would I want to. But guys like Chris Dixon, O’Donnell and Mireles are easier to track down.
The startup social network density has reached a tipping point in New York City. And that’s all that matters.