Victus Spiritus


Smart Money

07 Aug 2010

Money is Dumb Social Currency, We can do Better

Cash, liquid capital, beans, sheckles, loot! Money has more names than there are languages. Nearly every culture has a strong concept of money. It enables liquidity between any financially valued assets (like your time).

Lets look at a money trail. We work for money, the business we work for works for profit, our labor results in profit for a business which benefits other businesses or consumers. There's a healthy cycle between labor, services, products, and profit. Note that when this value trail fails to hold, trouble results*.

The real magic happens with self motivated workers who love what they do. The will to create is fed when workers observe rewards from their effective labor. Rewards may stray far from financial, having visible social impact is a potent motivator. Unexpectedly removing the concern for money enables businesses to get peak performance from their creative teams.

Smart Money

Investors have been using smart money techniques for many years now. They can track where and why money was invested, as well as measure the performance of diverse transactions. At large scales analyses can be done on the efficiency of capital and investments.

Consumers are beginning to take advantage of these techniques through Paypal, credit cards, banks, and new services like Venmo. These trackable transactions are the beginnings of smart money. Information goes along with the transaction acting as meta data. Not only do we know who the transaction was between, but what it was for. Now on a personal scale we can trace our transactions and investments and see how well our money is working for us.

The wide spread adoption of social networks in daily life has produced new opportunities for smart money. Now we can measure influence and actionable knowledge. Mentions, drive page views bringing attention to valuable sources of information. Just yesterday Fred Wilson mentioned Andy Swans 10 Startup Commandments which caused a traffic spike (a few to 150 simultaneous readers). I then added Andy's quality list to HackerNews where it received hours of community attention (HN folks dug it a much as Fred and myself).

This opens up new questions about value. How valuable was this mention to Andy? Will it result in new deal flow for his angel investing or additional attention for his company? It'll take regular high quality posts and visibility to make an impact. Spikes are fleeting, while repeat visits and attention are earned slowly. I sure hope it pays off in spades for Andy, he's an AVC regular and a sharp voice I've grown to rely on.

*= If government employs a significant portion of the population, there's no free market competition for those services which generally results in sub par products. For any who would like to argue this stance, I submit to your review government cheese. On the other extreme profit margins squeezed too tightly abuse employees and produce lousy services and goods.