all tags
I was at a talk at the RSA last night for a sneak preview of a new film ‘Us Now’ about the potential power of ordinary people using web 2.0 tools to change everything from the way government works to the ownership of football clubs. To quote internet guru Clay Shirky change happens not when we adopt new tools, but when we adopt new behaviours. And web technology can make this happen easier than ever before.
While inspiring and optimistic, and while both main political parties talk positively about digital democracy the reality that came across in the film is that the most innovative ideas were happening outside the confines of Westminster.
What was great about last night’s film though was not so much the grand talking about changing the way government works, but the examples of how the web's ability to pool a lot of people’s small amounts of money could make real business sense.
So the striking example from political culture not explored in detail in the film, Barack Obama’s successful use of social networking and generation of millions of dollars of individual campaign donations of under $200, not to mention his $46m's worth of free advertising through YouTube, underlines a powerful theme – the potential for new low-cost ways to finance business.
If you add the Obama example to the small but significant examples the film did provide you start to see a model which is even starting to raise interest (pardon the pun) in the finance community, according to one of the founders of Zopa.
What is Zopa? The clue's in their catchy slogan, “The human way of getting a low cost loan. Rather than making the fat cats fatter you pay interest to real people.” In essence by cutting out the bank middlemen and many of the associated overheads, borrowers receive lower rates and lenders benefit from higher ones.
How Zopa works, according to their FAQ is essentially:
• We look at the credit scores of people looking to borrow and work out whether they fit into the A*, A, B, C or Young market. If they're none of these, then Zopa's not for them.
• Lenders make lending offers – 'I'd like to lend this much to A-rated borrowers for this long and at this rate.' Borrowers size up the rates offered to them, and snap up the ones they like the look of. If they don't like the rates today, they can come back tomorrow to see if things have changed.
• To reduce any risk, Zopa lenders only lend small chunks to individual borrowers. A lender lending £500 or more would have their money spread across at least 50 borrowers.
The BBC News feature on Zopa from back in November 2006 ends by saying that banks may try to under cut the service, though in light of current events constraining new funding models and government intervention in lending policy this certainly seems a little less likely?
OK, so far so good. It’s not a million miles away from how Betfair was able to set up as an alternative the high street bookies. Instead of giving 'odds', by using the web it essentially matches up users to users, betting against each others' opinion of any given sporting outcome. And as a result, as I recall, the site handles more real time transactions than the London Stock Exchange.
Fancy your chances as a music producer rather than a banker, then you could try slicethepie:
“Slicethepie is a financing platform for the music industry that enables new and established Artists to raise money directly from Music Fans and Investors.
“On Slicethepie, Music Fans take on the A&R role, earning money reviewing tracks, spotting new talent and ensuring the best Artists get put forward for financing.
“Music Fans can then directly invest in the Artists in return for exclusive Artist access, a copy of the completed album, their name on the album sleeve and a decent share in the financial returns from album and single sales.”
Or perhaps you’re more of a football fan than a music guru? Then have you heard about the success Ebbsfleet United which won the FA Trophy at Wembley early this year? Self-proclaimed 'world’s first and only web-community owned football club'.
In April 2008 members, who can vote on the weekly team selection voted to freeze the season ticket prices, and in May they won the FA Trophy at Wembley beating Torquay 1-0. Finally in September MyFC members voted 82% in favour of EUFC selling John Akinde to Bristol City for £150,000 (plus add-ons). This was a world's first, where the fans had the final say in a transfer deal. Over 7,000 members voted in 48 hours.
What all these examples show it that the collaborative power of the web is one thing, but harnessing that to the ability to pool financial resources, is starting to deliver some exciting new communities of interest and ways of doing business. It may only be the 'beginning of the beginning' but with the credit crunch starting to erode traditional business models and the rise of web 2.0 perhaps the time is ripe for the developments highlighted by ‘Us Now’.
Wiki is perhaps the flag ship web app however not all sectors have their case study. I cannot think of any new news sources created by the internet (except for industry perhaps). There are aggregators like the Onion who don't employ their own prof journos and comment writers. Here's a good china one that's online only: zonaeuropa.com/.
I guess editorial reputation takes time to build. It's pretty rare to find someone self-criticial enough, although they certainly exist. At least physical publications have a careful story/writer-choosing and editorial policy.
AndrewPearl
Hi Andrew,
As well as a way of collecting user-content in one place like wikipedia I liked the concept of aggregating together small pots of finance as evidenced with the three examples of Zopa, Slicethepie and MyFootballClub.
As you'd expect the US is way ahead of the game on this, it's already got a catchy title 'Finance 2.0', with discussion at a recent Silicon Valley event including the US-version of Zopa called prosper.com.
For example it could be a way people who want to try their hand at investing Dragon's-Den-style could club together through an alternative venture capital site. It would serve to collect funds using the web in the way MyFootballClub did, and then ask companies to pitch their products to secure investment.
The twist is the winning company also benefits from the aggregated advice of all the investors through the online community, and in return the investors get the chance to vote on key business aims.
Just like the experience of the manager of Ebbsfleet United in the case of MyFootballClub, I suspect the chosen company MD would be a tad nervous to begin with, ensuring commercial confidentiality is protected wherever necessary.
This idea isn't that new. Back in 1995 I was privileged to be part of the team at Digital Equipment who created and managed the website for the current (and first supersonic) world land speed record in ThrustSSC . Having built the car and confident that it would do the job, the project very nearly failed due to lack of cash to pay for the fuel to fly the car to Black Rock Nevada on an Antonov transport aircraft.
We launched an appeal, asking website vistors to sponsor 25 gallons of fuel each and get a signed certificate in return. The response saved the project, ThrustSSC broke the sound barrier, and the rest is history. Richard Noble and Andy Green are now planning to repeat the exercise to break the 1000mph barrier.
Cheers Rob, love the Thrust video!
Picking up on my throw-away idea of a member-funded VC I yesterday came across a post recounting the funding of Stocktwits; what was interesting apart from the way they've built the site is that many of its members participated in the community's recent VC funding round.
"Trampoline Systems, specialists in “social analytics” for companies, launched in the UK and the US last year but a search for a new £5m round after an initial £3m round in 2007 from Tudor Investments (the venture arm of US hedge fund Tudor Group) drew a blank after Tudor was hit massively in the credit crunch.
"They’ve instead turned to “crowdfunding” to pull in lots of £10,000 or more from high net worth individuals around the world. They worked with lawyers for a month on how to structure the deal in compliance with UK regulatory rules, and aimed for £1m.
"The efforts are bearing fruit. Two weeks after launching the initiative they’ve now closed £330,000."
Remember that by posting a comment you are agreeing to the website Terms of Use. Please note that guest comments are not moderated.
Remember that by posting a comment you are agreeing to the website terms and conditions. Please note that guest comments are not moderated.
Community members please first Login
See the results
8934 Users 652 Posting(s) 1597 Comments
At the moment online are 0 user(s) and 1 guest(s).