Implications of Startups That Exist to Maximize Abundant Social Capital Instead of Scarce Economic Capital

by max ~ July 17th, 2010. Filed under: Uncategorized.

There is a new class of ventures emerging. They’re not focused on creating the next profitable widget. Their core purpose is about empowering people with tools, knowledge, social connections to live a better life and fulfill their dreams.

The currency of their value creation is broader than just along the economic spectrum. They are about unleashing the abundant resource of human potential and social capital.

This is a transformative departure from most organizations whose fundamental currency is economic capital. Given this, there’s bound to new ways of organizing, sharing resources, knowledge, tools and people. Social capital is fundamentally positive sum, and therefore potentially abundant, as it grows in value the more it’s used. Whereas organizations based on economic capital predominantly engage in pure quid pro quo, zero-sum exchanges of value.

I’m not sure what all the implications of this are, but I think we should try very hard to figure it out.

Here are some thoughts on why there are probably new organizational possibilities:

  • Organizations that are based on a currency that is positive sum rather than zero sum have the possibility to collaborate with others in truly new ways. If we find effective ways of sharing resources that grow the more they are used that has the potential to create exponential impact.
  • Organizations based on social capital also might be able to more easily collaborate with others on achieving complimentary aspects of mutually shared visions. With projects guided by social capital, sharing makes more sense, and there’s ways of creating mutually reinforcing value that grows the overall pie. Companies guided by an economic bottom line are incentivized to control a whole vertical themselves and treat those with similar intentions as competitors.
  • I also took a stab a few months ago at a theory called the Lego Model for how organizations might be able to achieve scale through collaboration. Lego Model. http://maxmarmer.com/2009/12/the-lego-model—-from-the-force-for-the-future-blog/
  • I think there’s a lot of potential to take many of these type of projects and create an organization similar to YCombinator but for projects centered around “unleashing human capital”.

    This consolidation and focus around a single brand could create a rising tide that lifts all of our work by focusing energy around what these new class of companies need to be successful which could include things like more effective PR, fundraising, and most importantly, collaboration. I think by bringing projects and people together in this fashion there’s an opportunity to rethink some fundamental assumptions about work, business and value creation. Experimenting with some loosely organized uniting brand allows us to begin how to build these structures in way that could accelerate the trajectory of all the projects it touches.

    This is a project my friends and I will be working on over the next year or two. If this is something that interests you, let me know.

    View Comments to Implications of Startups That Exist to Maximize Abundant Social Capital Instead of Scarce Economic Capital

    1. Brett Bolkowy

      I'm definitely interested in learning more – I've sent you an email.

    2. rahmin

      Thoughtful post. How do you contrast this to Social Entrepreneurship in general? Is this a subset? Superset? Synonym?

    3. Max Marmer

      Social Entrepreneurship is probably anything that is on the top of to middle of the social capital curve (power law).
      I think Social Entrepreneurship is a good term, but so many businesses have a social component that the label encompasses way too many organizations to often be a meaningful differentiator.

      I think the mission is consistent with social entrepreneurship but a key differentiation with these businesses is that they have an information technology component and are tied into “the network”. That's what allows these businesses to cost efficiently scale and integrate with the rest of the world.

      I also think Social Entrepreneurship ventures are often about solving survival needs (Food, Water, Shelter).
      The businesses we're talking about are usually solving enrichment needs (Knowledge, Community, Collaboration).

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