This next internet era of social capital reorients access to influence and resources. Now more than ever, it is feasible to fund your venture where your social capital is the investment. In the wake of the pandemic, many are starting (and funding) their ventures. Research points to a future in which nearly 80 percent of teenagers say they want to be their own boss; 40 percent aspire to start their own business.
Rex Woodbury’s article What Happens When You’re the Investment explores the next era of the internet where “social capital is becoming economic capital.”
In the wake of the pandemic, more people than ever are starting on their own ventures — the quitter trend to become your own boss. The pandemic sparked a historic burst in entrepreneurship and self-employment. Hundreds of thousands of Americans are striking out on their own as consultants, retailers, and small-business owners. But how are these ventures being funded?
Historically ventures are built on venture capital (VC) or bootstrapping. VC is a form of private equity financing that investors provide to start up companies and small businesses believed to have long-term growth potential. Bootstrapping refers to the process of starting a company with only personal savings, including borrowed or invested funds from family or friends, as well as income from initial sales.
Now more than ever, it is feasible to fund your venture where your social capital is the investment.
We’re on the precipice of the third era of the web. The web’s first era was about information flowing freely—think Google giving you access to the world’s knowledge. Most of us were passive consumers in this era. The second era was the social web—Facebook, Instagram, Twitter. People began to create their own content, and that content became the lifeblood of the big platforms. We became active participants, but the platforms devoured all the profits.
The third era of the web is about righting the ship. Social capital becomes economic capital. Value no longer accumulates to brokers and intermediaries.
As Woodbury states, “The promise of the internet was to erase the gatekeepers;” you wouldn’t need a middle-man to reach a global audience. The true promise of the internet is individual to worldwide reach and socio-economic equality. Music artists don’t need record labels. Filmmakers don’t need studios. Authors don’t need publishers. Product companies don’t need distributors. So how does an individual reach a global market? Hyper-niche markets. A hyper or micro-niche is a niche within a niche market that makes your market and your targeting incredibly focused. A savvy individual specializes in hyper-specific products or services sold to specific customer segments and sub-segments.
Most of us could live a very satisfying life selling to a micro percentage of 7.9 billion people.
Influencers across multiple platforms have reshaped the market by impacting purchasing decisions based on reputation, hyper-specialization, and followers. In the wake of their micro-niche social influence, many found a means to convert that into cash. As an example, I raise chickens for fresh eggs. I watch the White House on the Hill YouTube channel to help me learn about raising specific chickens. The channel has 819K YouTube subscribers, and most videos have millions of views. Between this and other social platforms, it is estimated that they earn $10K-$12K a month in advertising fees alone, not to mention the products they sell across those platforms. Their story is simple: they quit their jobs, rented a house on a hill, started raising chickens, and shared their story.
Those seeking to become their own boss can now fund their new ventures as a social influencer or with cryptocurrencies, social tokens, or NFT (non-fungible tokens). Woodbury writes:
Masmej did something few 23-year-olds would think to do: He tokenized himself. That is, he created a financial instrument known as a social token, a form of cryptocurrency whose value revolves around a person, to sell shares in himself. Holders of $ALEX would receive 15 percent of Masmej’s income for the next three years, capped at $100,000 overall, and would be able to exchange tokens for special privileges: 10,000 $ALEX bought a retweet from Masmej on Twitter; 20,000 $ALEX, a one-on-one conversation with him; 30,000 $ALEX, an introduction to someone in his network. In five days, Masmej raised $20,092, enough to send him across the Atlantic to San Francisco to launch his start-up.
Few business professionals take the time to carefully consider their social capital as access to financial resources. There is a recipe for this kind of innovation. Any and all innovations in history evolve or modify some transaction to redistribute value, resources, and identity. This next internet era of social capital reorients access to influence and resources. “The past decade was about transferring social capital: likes and shares and retweets. Our social capital powered the profit engines of Facebook, Google, and Twitter. We’re now shifting to an economic era of the web, one in which everyone is an investor. It doesn’t mean that there will be a human stock market where we buy and sell our friends. But this economic era does mean that everyone can invest—in fine art, in iconic songs, in public figures they believe in.”
This era means that it won’t be the few who are dictating culture, but the many. Popular culture will finally live up to its name.
About the author
John D. Patterson is the CEO of Influence Ecology and senior Faculty Manager of Influential U. He is co-creator of a next-generation business curriculum and since 2009 has taught thousands of business professionals the philosophy and practice of Transactional Competence™, a set of core competitive skills not taught in business school. Learn more at InfluenceEcology.com.