Most of the Members of our Global Community of Action will enter first as passive investors and then, as the organization matures, will find and enter as an owner-operator within an Enterprise Network. Because the organization will be pursuing an investment first strategy, by the time they are ready to take on a permanent, productive role, the investment funds will be available for them on favorable terms.
By the end of the Transformation, the profile of careers will match what I have described in the article, 'What will you be doing in the Information Age?', in other words, in descending order of frequency, Designer, Content Creator, Social Experience Creator.... However, at the beginning, most participants will be Content Creators, Scientists and Inventors, Entrepreneurs and Investors. This will partially reflect the investment first strategy, but also will be the result of the need to build the Information Age infrastructure first. In other words, inescapable limitations will continue until incomes explode and cultures of affluence emerge.
Beginning as a Passive Investor:
Our goal of 20,000 Members, at an average Venture portfolio of 10,000 USD, will provide a total of 200 million USD of investment funds. This will grow through retained profits, between now and about 2025, into an aggregated portfolio value of 200 billion USD. This means a portfolio growth, for the individual who made an initial investment of 10,000 USD, to 10 million USD in about a dozen years. The Book Value on 10 million USD of Market Value is about 833,333 USD. A 67% return on Book Value suggests that the portfolio will provide the Member with equity in earnings of 558,333 USD per year.
However, for about 80% of our Members, the investments will be made through an investment fund that will take about 20% for their services. Remember, as I discuss in The Death of Capitalism, only about 8% of the value of an Information Age company is in financial assets. Most of the value is in ideas, knowledge, relationships, etc.
You will be providing capital that will acquire about 20% of the enterprise's equity in earnings. 8% will be compensation for the funds contributed themselves and the remaining 12% will be for understanding the future, something you acquire through The Future 101, and the industry sufficiently to choose a winning idea. By investing through a managed fund, in essence, you will be giving 4% of that 12% to someone expert in the industry and in picking winners. For most people that will be 4% very well spent. Of course, if you think you are very good and can do better than the 12% yourself, then you will likely be in the 20% who choose to 'go it alone.'
So, the typical Member should have the following investment expectation as a component of their Knowledge Class action plan. You will invest 10,000 USD, mostly over the next five years. Within 20 years, your portfolio will have grown to 8 million 2012USD and will have transitioned from a growth to an income portfolio, providing an income stream of about 450K 2012USD per year.
About 160 Fund Managers
As already mentioned 80% or so of the investments will be made through managed funds. The average fund will likely have 100 participants X 10,000 average portfolio = 1.0 million USD of funds under management which will grow to 1,000 million USD over a dozen years. It will provide an annual income of 56,250K USD. The typical fund will likely take positions in ten to forty enterprises. At maturity, the fund manager's share will be 200 million USD and an annual income of 11,250K USD. In other words, Fund Managers, if they are good, will be among the most highly compensated members of the Knowledge Class. The scope of our Community of Action will support 160 fund managers.
There are Venture Funds today. Here is an example of an open Venture Club. Imagine an Industrial Age company with a billion dollar market value. It will likely have a Book Value of about 350 million. If it reached this point by growing at its equity constrained rate of 23% for ten years, then it would have needed an initial book value of $44,158,766.13.
Now imagine an Information Age company with a billion dollar market value. It will likely have a Book Value of about 85 million. If it reached this point by growing at its equity constrained rate of 67%, then it would have needed an initial book value of $503,795.42.
When a company needs to obtain $44 million of initial capital, the options are few. Deep pockets win over vision. The Venture Capital industry is an exclusive club of high net worth money guys. They hold all the cards and they call the shots. They also take most of the company, because they can.
When you need $500K to start a business, a Reg D, Rule 504 raised from visionary members of your expanded network can finance it. A $5,000 investment now becomes a $5 million portfolio in ten years. You can create 100 multimillionaires from 100 smart people of modest means. So, the game is no longer for high net worth money guys. Its for nearly anyone with the vision to participate.
Our Enterprise Network Founders:
Of the 20,000 Members that constitute our organizational development goal, most will enter an Enterprise Network, form a management team for a new enterprise, 'pitch it' to the fund managers and independent investors and become a member of the Knowledge Class, with a Knowledge Class income and lifestyle. However, the Enterprise Networks must be there to be joined. This requires that a percentage of our Members be Enterprise Network Founders.
How this will be done and how the Founders will be compensated is a complex question that will have a somewhat different answer with each Network. Polymathica, a Culture of Affluence that cherishes refinement and erudition, is an example. In fact, it is the one in which I wish to become involved. We will do so by creating the foundational organization for our nascent culture, Polymathica.com.
There people can find and watch refined and erudite television and movies. There the can consume more erudite news, analysis and commentary. There, they can acquire a more polymathic education and proper credentials for a polymath. There, they will find online stores of refined products and erudite services. And finely, with time, there they will be able to find Polymathican boutique villages, when they can live anywhere and choose to live elsewhere. It will be Netflix, Amazon, facebook, Yahoo, Monster.com all rolled into one and created especially for people of refinement and erudition.
Polymathica.com will organize and enable everything with the reward of advertising and commission revenue. People who want to create and sell content, products and services that will appeal to Polymathicans, can go to the Venture Club, a private and premium venue within Polymathica.com, and there meet investors who want to invest in content, products and services that will appeal to Polymathicans. People who want to provide content, products and services to Polymathicans can go to the Polymathica Career venue and find collaborators.
In other words, Polymathica.com becomes the founding organization that enables enterprises that, in turn, provide the environment that Polymathica.com offers to people of refinement and erudition. It is one example of many. In aggregate these Enterprise Network Founders will also be the Founders of the global, Information Age civilization. They will become many of the wealthiest and most influential people in the world and they will have earned it.
The Best of the Rest:
I have highlighted the 160 fund managers and what might be a couple thousand Enterprise Network Founders because, although they represent a minority of the Members of our Community of Action, they are critical to its success. Most of the Members will subscribe to The Future 101 to gain the basic knowledge they will need to participate in the Community of Action and to succeed in the Information Age. They will then move on to Membership with the intent to begin investing and to, over time, create their own Information Age enterprise.
However, none of it happens until and unless we find the organizers, the Founders the visionaries. Without them, the rest will sit around permanently waiting for something to happen. And having something happen is absolutely essential. We are headed for a train wreck, the four horsemen of the Industrial Age apocalypse. They are technological unemployment, death of the Industrial Age city, The disintegration of the corporation and the loss of national identity.
This will take place between now and about 2025. Avoiding it is devoutly to be desired. This is accomplished by acquiring an Information Age career and lifestyle before the worst of it arrives. I call this the 'save the World by saving ourselves strategy.' You want to be involved in it.
I realize that these events, these calculations will likely cause a degree of Future Shock in most people. Keep in mind that in the Information Age, this will not be rich. It will be solid upper middle class.
Since the financial investment comprises about 20% of the company valuation, the owner-operators within our Community of Action will have a Market Value of 200 billion X 4 = 800 billion USD. Consequently, we are pointed at a future, for some as early as 2015 and for most by 2025, where the typical Member of our Community of Action will have a personal financial profile that looks like this:
| Net Worth | Annual Income | |
| As Owner Operator | 32,000,000 | 1,800,000 |
| As Passive Investor | 8,000,000 | 450,000 |
| Total | 40,000,000 | 2,250,000 |
From an ideological viewpoint, many people decry the current income and wealth disparity, primarily in the U.S. Here is the inescapable logic. The disparity can only be remedied in one of two ways. Either the majority of people will get much more affluent or society as a whole will need to get much poorer. The former is clearly better than the latter and that is what the Income Explosion is all about.
We are at a point in our history of great change. I quote John Maynard Keynes, '"I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate. But, of course, it will all happen gradually, not as a catastrophe. Indeed, it has already begun. The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed."
We can excuse him for not seeing the paroxysmal event facing us right now. He got the rest exactly correct. In this strategy to save the World by saving ourselves, the biblical passage comes to mine, 'Many are called; few chosen - Many hear; few believe.' I am discovering the truth of this in today's situation. However, a few are enough.
No comments:
Post a Comment