Social Capital and Collaborative Consumption

You know that feeling, the one where all of these fuzzy little spots of light in your head suddenly come into focus and fit together like pieces of a puzzle.  It’s not a light bulb moment, or an epiphany, more like connecting all the dots.

I’ve experienced a few very specific moments like this in my life.  Each of them have come with the help of someone who had already put those pieces together.  They probably weren’t the first, and certainly did not illuminate each of those dots to the degree that someone else might, but they were able to put all of the pieces together and help me to do the same.  They may not have been my pieces, but the impact on me was profound to the point where mine all came together.  We may all be living in the same forest, but we can only live amongst so many trees at one time, no one can experience the whole on a micro level.

I had one of these experiences last night.  I knew it right away, the same feeling I had about six years ago.  I felt the same awe and calm come over me, and I literally sat still for about 30 minutes just letting it sink in.  I came back to my desk wanting to get it all down on paper, and all of the sudden I became scared that I wouldn’t be able to express the things that had happened in my head.  I’m still not quite sure I can, but here it goes.

I am a millennial, or as they say these days, a digital native.  I’ve grown up in a world where physical things and experiences are moving on to the web and into the cloud.  I don’t own many things, not because I can’t afford them, but because I just don’t want them.  I’m not quite sure when or where I heard the saying, “in the end, your possessions will own you”, but it made so much sense to me.  I live in a 400 square foot apartment in a really nice neighborhood of NYC, I’ve got a 600 square foot back yard with a grill and firepit that my friends and I sit around and enjoy.  I own a bag full of hockey equipment, a bunch of clothes, some kitchen stuff, a bed, couch, and a huge television to watch sports on.  I own a laptop and an iPhone.  And that’s pretty much it.

I don’t want to own a car, I just want access to one when I need it.  I don’t want to own a beach house like my parents, I just want access to one when I have the opportunity to use it.  I don’t want to own a library of books, music or videos physically.  In fact I don’t want to own any of that at all, physical or digital, I just want access to these things when I want to use them.  Some of my friends, who could easily afford it, don’t even have cable because they feel it’s a waste, they would rather go to the bar and watch the game there amongst a group of people.

I watched my parents and their friends growing up agonize over what they did or didn’t own.  It was about collecting things and showing them off to displaty that you had “made it”.  The bigger house, the nicer car, the more expensive furniture or jewelry.  I understand why they acted this way now, it was that they had nothing growing up.  The attainment of these things made them feel as if they had made it.  I watched all of this and just asked the question over and over, does this really make you happy?  I guess it did for them, but it never did it for me.  I’ve written here often about shared experience, and how no matter what you own or are doing in life, without people to share it with, it means nothing.

The attainment and consumption cycle of my parents’ generation isn’t working out so well.  Their generation took on a huge amount of debt to finance that consumption, started living way beyond their means, and we all payed for it in 2008 when that ponzi scheme fell apart.  Not only did they hurt themselves, but they hurt everyone else with their consuming lifestyles by destroying our environment.

I don’t blame them.

People are mostly the products of their environment and the system they live in.  Their culture, beliefs, habits, everything.  We’re all born with small differences in genetic makeup, and some are more likely to excel in different walks of life because of that.  But overall, we are the products of our environment.  The way the world was set up at the time led them to behave in this way.

I’ve grown up at the beginning of the social networking phenomenon, it has just begun.  I was a freshman in college when Facebook launched for real.  I am not, nor have I ever been worried about my privacy online.  There are basic things I do not to give myself a bad name online, but it’s not rocket science.  I use Groupon and a bunch of the other social buying sites.  I’ve used CouchSurfers to experience foreign countries through the eyes of real people instead of staying in hotels.  I used Craigslist to find my apartment and all my furniture.  If I want to know something I ask Wikipedia (the crowd).  I’ve been moving many of the things I did own into the cloud.  My music, videos, documents, I am a paperless person.  I don’t really own these things anymore, I share a piece of them through services like NetFlix and Rhapsody, and free sites like Pandora, Grooveshark, Hulu, Boxee, etc.

I don’t know a world where I’ve ever had something to share and couldn’t.  When I wanted to start blogging and sharing my ideas, it was easily available to me in about two hours with a domain name, WordPress plugin, and some simple graphics work.  Twitter has been there since I wanted to share.  StockTwits came along just as I was starting to share as well.  And somehow I ended up working here.  It wasn’t by chance.

I’ve grown up in a world of sharing, both things and ideas.  It’s come natural to me, not because I’m some kind of forward thinker, but because that was the environment I was given.  Yes I am naturally opinionated and have acquired decent writing skills, but I chalk it up largely to the culture around me.  My generation has a different view on sharing, ownership, and privacy than those before us.

For some time I’ve known the world was changing, dramatically, in a very serious way.  I had all of these pieces and experiences and anecdotes floating around in my head.  I knew Facebook was changing the way we think about the idea of friends and privacy.  I knew that people moving their possessions into the cloud and giving up ownership of those things was profound.  I knew the ability for anyone to reach a worldwide audience through blogging or sharing on sites like Twitter and StockTwits was changing the way we find talent and content, along with giving the person with something smart and insightful to say the ability to make a name for themselves.  I knew inherently that companies which were doing for real things what the cloud was doing for digital assets was a huge advancement, think Zipcar.  All of these pieces were floating around, trees amongst the forest, but I didn’t quite understand what the connection was.

There was another piece to this.  Howard likes to call it “social leverage”.  It really clicked for me a few months ago.  The idea was that through all of the sharing of information, knowledge, brand building, and good will, there would be a benefit.  And there is, a huge one.  As an example, someone called me up the other day asking me about my firm and a few specific questions regarding social media and compliance for registered investment advisors.  I was glad to help out, and walked him through what I know.  I told him if he ever had any other questions, feel free to ask.  He did, and eventually became a consulting client of mine.  At dinner last week he said something that floored me.  He told me that he had called around to multiple different social media compliance firms looking for some simple questions answered, and they all told him that they needed an up front deposit for them to tell him anything.  He told me that he was so taken aback by the fact that I was willing to share a bit for free, that it was a no brainer he become a client of mine.  Did I do anything amazing, did I give away all my knowledge for free, did I spend a crazy amount of time helping this person?  No.  It took a few minutes, a few e-mails, and knowledge that I already possessed, I lost nothing by sharing.  Now he’s a client, and I get a tangible benefit.

I knew all of these things before last night.  But I didn’t understand what the arc they sat on was.

Thomas Friedman put all of the pieces together in his book “The World Is Flat”.  He was able to take stories, data, and trends from all over the world and wove them into the term Globalization.  Was he the first to use that term, no.  Was he the first to put it all together, no.  Was he the first to really put it together in a way that everyone could understand it, yes.  I had one of the moments I’m talking about now when I read that book.  I read it in two days, and I sat there with my mouth agape just about the entire time.  It was so obvious to me the monumental shift that was taking place on this earth, you just couldn’t ignore it.

It’s happening again.  Before I get to the end of this, I want you to watch the video that I watched last night which puts it all together for me, then read on and I’ll discuss what it all means.

The way we consume is changing.  And seeing as our economy is what, 80% consumption, I’d say that it’s going to have a profound impact.  In fact, it already has, it’s becoming harder to measure GDP when people are consuming things that don’t really exist.  We aren’t all buying things, we’re sharing them, we’re re-purposing them, we’re trading them, we’re renting them.  Our whole economy is changing, just as it did when we entered this recent age of globalization.  The pieces all fit on to the arc of collaborative consumption.  We aren’t doing these things now because we all decided to be nice and play together.  The world doesn’t work like that friends, people are out for their own benefit, and economics plays a monster role in their decisions every second of every day.  Do I buy that CD from Tower Records or do I buy it digitally from iTunes.  Do I buy it digitally from iTunes or do I not even want to own it, but buy the rights to listen to it in the cloud from Rhapsody.

The reason this is happening now, is because of connectivity.  We’ve reached an inflection point in technology that allows the world to become a village again as she says in the video.  We are natural sharers.  Before modern economic theory, each of us instinctively understood that we were each better at doing different things, and by division of labor the whole group could have more.  The problem is, we got away from sharing, and wasted resources in the process, it wasn’t natural.  We still have our division of labor, but we don’t share resources well within the group, and each of us has suffered because of it.

Want access to all of these things, you need social capital.  Social leverage is one of the things that you get from building your social capital.  This is the entrance fee to the party.  This is the reason I instinctively share my ideas, my photos, and don’t worry about my privacy, it’s all an entrance fee.  If someone else is going to share with me, or give me a job, or give me money to manage, or give me a piece of something they own, they want to know I’m trustworthy and that I’ve paid into the system as well.  This is why I have signed clients to manage under Surfview Capital without ever having met them.  They looked at my whole presence on the web, talked to me through Skype, and decided that I had enough social capital, that I was trustworthy.  The business side of investment management is not about what your returns are, frankly most people could give a crap, it’s about who you are and how much they trust you.  I might not have the old school title of who you are in terms of having been through the Goldman Sachs system, but I sure as hell have the new age social capital now, and I’m sure as hell trust worthy, I have a record a mile long on the internet that anyone can search to back that up.

We’ve reached a tipping point in that technology which has turned all of this back on.  Whole industries are being erected, our economy and lifestyles are changing dramatically, sometimes overnight.  People are making fortunes, people are losing jobs.  It all fits onto this curve of collaborative consumption and social capital is the entrance fee.

I’m still kind of in awe of putting this all together, and the fact that Rachel references Tom Friedman specifically makes it all the more real to me.  Tom taught many of us in the millennial generation how to connect the dots.  I’m glad someone who’s learned from him has helped me to connect these.

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see the Disclaimer page for a full disclaimer.


blog comments powered by Disqus