90% of the agricultural lands in the Bahamas is owned by the government. These lands that have always been marginal for growing things, over the next twenty years, will become prime real estate for development. As incomes explode, people acquire a 'live anywhere' capability and retired baby boomers also find they can live anywhere, every nook and cranny will get developed.
However, the Bahamas represents some of the best opportunities anywhere. The Acklins archipelago is about 200 square miles and has a grand total of about 800 people living there. The archipelago has over two hundred miles of shoreline and when developed will likely hold a population of over 1.7 million. Samana Cay is about 17 square miles and is uninhabited. It will likely be developed into something like the Hamptons and be home to about 100,000. Mayaguana is 105 square miles and will likely accommodate nearly 1,000,000 population.
The key issue is that the Bahamian government, who currently owns all this land and claims sovereignty over it until very recently seemed to be cooperating with the the inevitable process. They had created a joint venture with Boston's I-Group to develop a significant portion of Mayaguana. This, in combination with the Honduran free state initiative, was suggesting that at least some of the nations that would be attractive to boutique village developers were behaving in an enlightened and cooperative manner.
It was with sadness, then, that I learned today that the I-Group Mayaguana project has fallen through. This has disturbed at least some Bahamians as well. It is inevitable that The Bahamas will fill up with Knowledge Class Professionals from around the world. The land that it will require has a current market value of over 50 billion 2012USD and most of it is owned by the government. That is a huge sum of money for a government that currently has a 1.7 billion annual budget. It is only a matter of time before pure economics will move the discussion and prevailing attitudes toward development.
When developed, the real estate will have a value of nearly 25 trillion dollars. This is a staggering sum that will motivate people to extraordinary acts. It is possible that the Bahamas may be the first nation to fall to the Information Age, perhaps violently. It may be the first nation to be conquered by an NGO. Or it could be that interested parties will corrupt the government with piles of money just to big to ignore. Again, an enlightened government should learn from history, bow to the inevitable and create a strategy that maximizes their outcome.
Equitopia Productions is exciting. Mycroft's Business Lounge will be fun. However, for flat out size and affluence generation, nothing will compare with the Boutique Villages. As Thomas A. Stewart says, we are at the beginning of the biggest real estate boom in all of history. Furthermore, he underestimates its size by at least a factor of four. Over the next thirty years, Western civilization, alone, will build over a quadrillion dollars of real estate. That is enough money to create a million billionaires.
Of course, my interest is not primarily monetary. I want to build Polymathican villages, specifically designed to facilitate and enhance a Finely Crafted Life for people of refinement and erudition. The schools will be polymathic, the products in the retail shops will be refined, the neighbors will be refined and erudite. Yes, a few visionaries who design and build these villages will become very wealthy. However, thousands, even millions of people will have a home and that is of greater importance.
The first village will be somewhere in the Caribbean. The Bahamas are the most convenient, but if the government will not cooperate, we can build elsewhere. If Honduras can tolerate Libertarians, they should definitely welcome us. Over time, however, the Polymathican global culture will likely reach a population of over 15 million and will require the construction of 500 villages. That is enough so that we can build them in the tropics, in the temperate zones, near the ocean, in the mountains and on the plains. We can make them urban, suburban and exurban.
As with all of the projects that I am initiating, if you are interested in participating in the planning, design and/or construction boutique villages for Polymathicans, drop me your e-mail address and I will put you on my private lists and venues. I cannot and do not want to be everywhere at once, so leadership opportunities abound.
Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts
Monday, May 14, 2012
Sunday, May 13, 2012
At the Core of It All
In the final analysis, the government can encourage Information Age enterprise formation with less strict equity sales requirements for start-ups and loan guarantees that could increase long term Debt-to-Equity ratios to well over 1:1. It is true that annual returns of 70% or more that will prevail in the Information Age enterprises, combined with the risk abatement and growth enhancement through membership in Enterprise Networks, will ultimately be the formula that draws us out of the profound economic malaise that the four horsemen of the Industrial Age Apocalypse will visit upon us. However, enlightened economic policy can hasten the end of our imminent 'time of troubles.'
The Polymathic Institute, which I intend to be a 'for profit but philanthropic anyway' organization, will be doing a great deal of good in the interim. It will do so most notably through the education one receives about the Transformation in The Future 101. Soon we will be adding a companion education on polymathy on our way to ultimately certifiying Polylmaths. However, organizational development will also encourage the development of network ties between visionaries, entrepreneurs, creatives, investors and technologists.
People may become involved in The Polymathic Institute either as a Member or as a Fellow. Both Members and Fellows will receive a subscription to The Future 101 for as long as their status remains current. However, as I say, this is knowledge that simply begs to be used. Consequently, the real value is in the organizations, enterprises, private venues and relationships that we will create and nurture.
As you may know, I have pointed out that turning $10,000 into $10,000,000 in 10 years or less is an Information Age norm for private equity investors. There is nothing magical about it, though it is technically complex. Rather, that is the value added you bring when you enable, through subscription in a primary offering, an entrepreneur with an Information Age idea. If you are or want to be an entrepreneur with an Information Age idea, you will be able to raise the necessary capital while being relieved of no more than 20% of your ownership.
I'm going to be really frank here. The United States, the paradigmatic Industrial Age nation, was founded by a bunch of well educated, relatively affluent men who were visionary but also probably had IQs comfortably above 140. Since then, our leaders have devolved to a median IQ of about 125. I therefore call our system a Mediocracy or 'rule by the kind of smart'. If we are to be successful in establishing an Information Age civilization with an Information Age economy, our leaders are going to need to be of significantly higher intelligence. They are probably going to need to be smarter than 'The Founding Fathers.' We aren't going to elect such people. Visionary geniuses generally confuse and frighten people. consequently, as I have said, we must 'save the world by saving ourselves.'
That is only going to be accomplished by creating the structures mentioned above. They will not create themselves and they will not be created for free. Yesterday, I described Equitopia Productions, an enterprise that will bring together creatives, investors and entrepreneurs to create made-for-Internet television. It, and Enterprise Networks like it, will turn $10,000 into $10,000,000 in 10 years or less for thousands of investors. It will provide Information Age incomes while enabling the visions of tens of thousands of creatives. It will provide superior monetization options for hundreds of thousands of website entrepreneurs.
So, as part of the Membership or Fellowship in The Polymathic Institute, every participant will automatically belong to The Private Equity group.
It is a place where entrepreneurs, creatives, technologists, visionaries and investors can gather to forge relationships and enable Information Age start-ups. While there are Membership and Fellowship fees, there is no underwriting or third party securities sales allowed. For active participants this is a substantial reduction in total costs, since private equity underwriters typically charge 10% plus expenses for best efforts underwritings.
You will not be inundated with poor quality business plans, either. You will not be recruited into an MLM or asked to finance one. Business plans may only be presented by Fellows and Fellows are 'vetted.'
Mycroft's Business Lounge
Because it will be fun, rewarding and enabling, one of the first projects, and we have some really great ones to tell you about, will be Mycroft's Business Lounges... sort of Starbucks on steroids. It will also be a venue in most major metropolitan areas where members of the Private Equity Group can meet in person. It will be The Polymathic Institute's 'home away from home.'
Starbucks has become the office away from the office by default. Mycroft's will be specifically designed for it.
This will be a franchise operation. It will be in a relatively large, preferably stand alone, building. It will be your office away from your office. There will be many benefits over doing business in a Starbucks. First, there will be docking stations for your lap top. If you did not bring your lap top, there will be rentals. Need earbuds? Or a flash drive? Mycroft's will sell them.
Bandwidth will be much greater and allow for effective video conferencing. There will be meeting rooms and private rooms if you want a more quiet or private accommodation. You will be able to rent a projector, white board, flip chart, laser pointer, etc. There will be wireless connections to printers that can double as copiers. There will be a resident IT consultant that you can retain if you are having technical difficulties or just want to know how to do something.
Tables, chairs and rooms will be more club like and less cafe like. Servers, in something somewhat more gracious than a green apron, will attend to you where ever you have chosen to locate.
A concierge is on duty to arrange your details, whether it be a dinner or hotel reservation, taxi to the airport or flowers to your spouse. If you are visiting, the concierge can arrange a tour of attractions. If you need to bring an armful and you would like to leave it for an hour or two, lockers are available.
Coffee is not cheap but refills are free or, in the case of coffee drinks, at a reduced cost. Not only will pastries and sandwiches be available, but also fruits, cheeses and in most locations beer and wine. When possible, after 5:00 somewhat stronger libations will be available. Again, the intent is that for the Information Age Knowledge Class business person, Mycroft's is a home away from home - an office where you need one.
Often in the evenings rooms will conduct seminars and presentations from local and visiting business, technology and future studies experts. Some will be arranged by Mycroft's but others will be businesses renting rooms to conduct their business. A business author simply must include Mycroft's in the book tour and book signings will be a regular event. Of course the Wall Street Journal and various business periodicals will be available at no charge.
There will be a short and inexpensive route to Mycroft's ownership for those who are interested. You will begin by developing the Polymathic Institute Private Equity Group in your target location. You will develop members on the Internet and then trade with others to get your locals. You can and should promote locally as well.
When your list becomes large enough, you will leverage your ability to talk to a large number of local business people into debt and equity funding of your establishment. Franchise fees will be far less than the prevailing market. My interest is in creating a global network, which I do incidentally through your business. Franchise fees will compensate fairly for the use of the business model, but will not be intended to 'maximize profits.'
We will begin with the assumption of one Mycroft's lounge for every half million population in North America, Australia and Western Europe. Eastern Europe and South America will require somewhat larger markets. In total, we will identify 2,000 local clubs that have the potential to become Mycroft's. To take this opportunity you will need to be a Fellow.
Starbucks average a little over $1.o million in revenue per store. Because Mycroft's will be physically larger, will provide a broader spectrum of services and will be somewhat more upscale, they will probably average annual revenue of $2.0 million. Owners should earn at least $400K USD from store operations.
However, that is the start, not the end, of the potential of Mycroft's ownership. It will be a networking heaven for all visitors and Members. The local franchisee will be in a particularly auspicious position to take full advantage of networking opportunities. Consequently, it is assumed that the local Mycroft's franchisee will become a leader of the business community and will enjoy augmented income.
As I have said, I intend to provide every Member and Fellow with a legitimate chance to enter the Information Age Knowledge Class prior to the 'train wreck.' That means a career compatible with A Finely Crafted Life. That means an income that enables A Finely Crafted Life. If this or any of the opportunities that will accrue to Members and Fellows of The Polymathic Institute are of interest to you, send me your e-mail address and I will put you in my private mailing list. From there you will be invited to various private venues to learn more about Membership.
The Polymathic Institute, which I intend to be a 'for profit but philanthropic anyway' organization, will be doing a great deal of good in the interim. It will do so most notably through the education one receives about the Transformation in The Future 101. Soon we will be adding a companion education on polymathy on our way to ultimately certifiying Polylmaths. However, organizational development will also encourage the development of network ties between visionaries, entrepreneurs, creatives, investors and technologists.
People may become involved in The Polymathic Institute either as a Member or as a Fellow. Both Members and Fellows will receive a subscription to The Future 101 for as long as their status remains current. However, as I say, this is knowledge that simply begs to be used. Consequently, the real value is in the organizations, enterprises, private venues and relationships that we will create and nurture.
As you may know, I have pointed out that turning $10,000 into $10,000,000 in 10 years or less is an Information Age norm for private equity investors. There is nothing magical about it, though it is technically complex. Rather, that is the value added you bring when you enable, through subscription in a primary offering, an entrepreneur with an Information Age idea. If you are or want to be an entrepreneur with an Information Age idea, you will be able to raise the necessary capital while being relieved of no more than 20% of your ownership.
I'm going to be really frank here. The United States, the paradigmatic Industrial Age nation, was founded by a bunch of well educated, relatively affluent men who were visionary but also probably had IQs comfortably above 140. Since then, our leaders have devolved to a median IQ of about 125. I therefore call our system a Mediocracy or 'rule by the kind of smart'. If we are to be successful in establishing an Information Age civilization with an Information Age economy, our leaders are going to need to be of significantly higher intelligence. They are probably going to need to be smarter than 'The Founding Fathers.' We aren't going to elect such people. Visionary geniuses generally confuse and frighten people. consequently, as I have said, we must 'save the world by saving ourselves.'
That is only going to be accomplished by creating the structures mentioned above. They will not create themselves and they will not be created for free. Yesterday, I described Equitopia Productions, an enterprise that will bring together creatives, investors and entrepreneurs to create made-for-Internet television. It, and Enterprise Networks like it, will turn $10,000 into $10,000,000 in 10 years or less for thousands of investors. It will provide Information Age incomes while enabling the visions of tens of thousands of creatives. It will provide superior monetization options for hundreds of thousands of website entrepreneurs.
So, as part of the Membership or Fellowship in The Polymathic Institute, every participant will automatically belong to The Private Equity group.
It is a place where entrepreneurs, creatives, technologists, visionaries and investors can gather to forge relationships and enable Information Age start-ups. While there are Membership and Fellowship fees, there is no underwriting or third party securities sales allowed. For active participants this is a substantial reduction in total costs, since private equity underwriters typically charge 10% plus expenses for best efforts underwritings.
You will not be inundated with poor quality business plans, either. You will not be recruited into an MLM or asked to finance one. Business plans may only be presented by Fellows and Fellows are 'vetted.'
Mycroft's Business Lounge
Because it will be fun, rewarding and enabling, one of the first projects, and we have some really great ones to tell you about, will be Mycroft's Business Lounges... sort of Starbucks on steroids. It will also be a venue in most major metropolitan areas where members of the Private Equity Group can meet in person. It will be The Polymathic Institute's 'home away from home.'
Starbucks has become the office away from the office by default. Mycroft's will be specifically designed for it.
This will be a franchise operation. It will be in a relatively large, preferably stand alone, building. It will be your office away from your office. There will be many benefits over doing business in a Starbucks. First, there will be docking stations for your lap top. If you did not bring your lap top, there will be rentals. Need earbuds? Or a flash drive? Mycroft's will sell them.
Bandwidth will be much greater and allow for effective video conferencing. There will be meeting rooms and private rooms if you want a more quiet or private accommodation. You will be able to rent a projector, white board, flip chart, laser pointer, etc. There will be wireless connections to printers that can double as copiers. There will be a resident IT consultant that you can retain if you are having technical difficulties or just want to know how to do something.
Tables, chairs and rooms will be more club like and less cafe like. Servers, in something somewhat more gracious than a green apron, will attend to you where ever you have chosen to locate.
A concierge is on duty to arrange your details, whether it be a dinner or hotel reservation, taxi to the airport or flowers to your spouse. If you are visiting, the concierge can arrange a tour of attractions. If you need to bring an armful and you would like to leave it for an hour or two, lockers are available.
Coffee is not cheap but refills are free or, in the case of coffee drinks, at a reduced cost. Not only will pastries and sandwiches be available, but also fruits, cheeses and in most locations beer and wine. When possible, after 5:00 somewhat stronger libations will be available. Again, the intent is that for the Information Age Knowledge Class business person, Mycroft's is a home away from home - an office where you need one.
Often in the evenings rooms will conduct seminars and presentations from local and visiting business, technology and future studies experts. Some will be arranged by Mycroft's but others will be businesses renting rooms to conduct their business. A business author simply must include Mycroft's in the book tour and book signings will be a regular event. Of course the Wall Street Journal and various business periodicals will be available at no charge.
There will be a short and inexpensive route to Mycroft's ownership for those who are interested. You will begin by developing the Polymathic Institute Private Equity Group in your target location. You will develop members on the Internet and then trade with others to get your locals. You can and should promote locally as well.
When your list becomes large enough, you will leverage your ability to talk to a large number of local business people into debt and equity funding of your establishment. Franchise fees will be far less than the prevailing market. My interest is in creating a global network, which I do incidentally through your business. Franchise fees will compensate fairly for the use of the business model, but will not be intended to 'maximize profits.'
We will begin with the assumption of one Mycroft's lounge for every half million population in North America, Australia and Western Europe. Eastern Europe and South America will require somewhat larger markets. In total, we will identify 2,000 local clubs that have the potential to become Mycroft's. To take this opportunity you will need to be a Fellow.
Starbucks average a little over $1.o million in revenue per store. Because Mycroft's will be physically larger, will provide a broader spectrum of services and will be somewhat more upscale, they will probably average annual revenue of $2.0 million. Owners should earn at least $400K USD from store operations.
However, that is the start, not the end, of the potential of Mycroft's ownership. It will be a networking heaven for all visitors and Members. The local franchisee will be in a particularly auspicious position to take full advantage of networking opportunities. Consequently, it is assumed that the local Mycroft's franchisee will become a leader of the business community and will enjoy augmented income.
As I have said, I intend to provide every Member and Fellow with a legitimate chance to enter the Information Age Knowledge Class prior to the 'train wreck.' That means a career compatible with A Finely Crafted Life. That means an income that enables A Finely Crafted Life. If this or any of the opportunities that will accrue to Members and Fellows of The Polymathic Institute are of interest to you, send me your e-mail address and I will put you in my private mailing list. From there you will be invited to various private venues to learn more about Membership.
Thursday, February 2, 2012
Building a Liberating Portfolio While Saving the World
Lately, I have been reading ever more frequently that 'nobody wants a job'. That, of course, is ludicrous. What is really meant is that most people don't want the job they have. They spend 40 hours a week at a job and another 3.5 hours commuting to engage in an activity that they really would rather not do. The problem is, everyone wanted to be a rock star. The vast majority were not good enough to get one of the limited gigs, so,instead, they are changing brake pads at the local garage. All day long they engage in the same dull and repetitive activity.
Within ten, perhaps twenty, years we will all have 'smart garages'. We will drive in every evening and every morning the garage will have done the necessary maintenance, washed and detailed our car and we will be ready to go without ever thinking about the details. No more changing brake pads for anyone.
But for now, the rock star is an auto mechanic and he is selling five of his days per week to an economy that needs the work done. In return, he is allowed to live two days per week. If you ask him if he wants his job, of course he'll say no. However, if you tell him he can be a rock star after all, he will be in line, taking one of the gigs, before you can blink.
Almost everyone has productive urges. They really don't want to be completely indolent. They simply want to do the productive things that they want to do without concern for how much money they will or will not earn from it. They want to do it as much as they want to do it, not how much they need to do it in order to have enough money. It is from this frustration over inappropriate work rather than a desire to avoid work, that the attractiveness of The Venus Project and The Zeitgeist Movement originates.
One of the most extraordinary opportunities to work 'how you wish rather than how you must' arises from the dramatic changes that are taking place in the investment markets. If you read the Abstract, The Death of Capitalism, you will, actually, have all the information you need to understand what it is. However, I will summarize it here, as well.
In the Abstract I show you that Industrial Age companies had equity constrained growth of about 23% per year and typically had Market to Book Value Ratios around 2.5. Information Age companies have equity constrained growth rates of 67% and Market to Book Value Ratios in the range of 12. Because of this fundamental and dramatic change in the structure of Financial Markets, nearly everyone actually has their thinking about investing exactly backward.
Because the value of an Industrial Age company was so concentrated in the financial capital, both contributed and retained, people have thought about how much portfolio value they can have in Y years with an initial investment of X. For example, suppose a 35 year old has a $10,000 portfolio that they might like to roll over into an IRA and pursue higher risk, higher return investment opportunities.
If they set their return expectations at, say, 18% (historically the S&P 500 returns about 11%) they will expect a portfolio valuation of $1,996,292.77 thirty two later when they retire at the age of 67. However, they understand that inflation will have devalued their portfolio and it will likely be, in today's dollars, valued at about $900,000. They will need to lower their return expectations in order to prudently lower their risk, after retirement, likely to about 7% after inflation. That means that they will have about $63,000 of retirement income in addition to their Social Security and/or pension income.
There is one more, very important aspect that most people don't know or don't think about. As a mass market investor, when you buy stock, it is almost always from the secondary market. What that means is that you are not investing in a company. The company gets none of your money. Rather, you are making a wager. You are betting that the prospects for return on investment are more than supported by the purchase price. With the fullness of time, if you are correct, you win and the seller loses. If not, it is the other way around. You lose and the seller wins.
It isn't quite a zero sum game because the value of stocks do tend to increase over time and most, though not all, dividend a portion of their earnings to the owner of record. However, it has nothing to do with investing in the future economy or in the businesses themselves. Wall Street, in this manifestation, which is by far its largest one, is essentially a huge casino where the house take, effectively, is negative. If you win, you may be saving yourself, but you are doing nothing to save the world. Also, above the growth in market valuation, it is a zero sum game and your win is someone's loss.
However, there is a primary market for securities, as well. It is totally different from the casinos such as the New York, NASDAQ, London, Tokyo, Euronext, Deutsche Borse, Borsa Italiana, et al stock exchanges. It is private. Your purchase funds the business itself. This has been primarily a playground for the wealthy, either through Venture Capital partnerships or individually as 'Investment Angels'. It is a very significant component of the phenomenon of 'the rich getting richer' and the resultant income and wealth inequalities. The only significant exceptions are the IPOs where individual investors do get to invest in the company directly, at least in part. Most IPO's also cash out early round investors and as such are secondary market purchases.
The risks in the private, primary markets are, indeed, higher, but the rewards are also higher. When the Industrial Age companies could not grow faster than 23% per year without additional equity infusions, for the small investor, the risk was not justified by the potential return. However, with the 67% equity constrained returns of Information Age companies, the dynamic is totally different.
In the wonderful SAP panel discussion on the future of business, X Prize Chairman, Peter Diamandis introduced the idea of an Age of Abundance. He said that billion dollar companies will go bankrupt overnight to be replaced almost as quickly by new billion dollar companies. In this, he is absolutely correct. In fact, during the Transformation, Real Gross World Product (GWP) will likely grow 70 fold. Not only will new billion dollar companies emerge, there will be seventy of them for every one that goes under. In other words, during the Transformation, new billion dollar companies will arise everywhere. So, let's think about how much it will cost to get into one.
In The Death of Capitalism Abstract, I show that Industrial Age companies typically will have an equity constrained growth rate of about 23% and a Market to Book Value Ratio of 2.5:1.0. On the other hand, Information Age companies typically will have a equity constrained growth rate of 67% and a Market to Book Value Ratio of 12:1.0. You will know whether you properly appreciate the difference based upon whether it stuns you or not. If it doesn't, you need to think about it more. If it does, then you understand that the world of business and investment markets is undergoing its greatest upheaval in history. It will enable a democritization of wealth.
An Industrial Age company with a billion dollar Market Value will likely have a 400 million USD Book Value. Suppose that the company had been started ten years earlier and the first round of investors got 50% of the company for 100% of the equity contribution. A simple calculation tells us that the investors must have put in 400 million USD / (1.23^10) =50,467,161.90 USD. Their current market value is 500 million USD which translates to a respectable 25.77% annual return. In order to buy a $1,000,000 portfolio ten years hence, the cost would be 50,467.16 USD today. Most of us don't have that amount of risk capital available to us.
Now let's consider the billion dollar Information Age company. Its book value will be 83,333,333 USD. At a 67% annual equity constrained growth rate, the contributed capital ten years prior would have been 83,333,333.33 / (1.67^10) =493,917.08 USD. However, because of the high competition for the very high ROIs that will typify Information Age companies, the initial investors only received 20% of the company for a Market Value of 200,000,000. The annual return is 82.28%. More importantly, you can buy $1,000,000 of portfolio ten years hence for just 2,469.59 USD today! Many, probably most, of us do have that amount available for risk capital.
As we discuss in The Future 101, it is also very significant that in the Information Age scenario, the entrepreneur kept 80% of the company versus keeping 50% of the company in the Industrial Age scenario. It not only enables entrepreneurship in the Information Age, it makes it much more attractive.
So that is the light switch that needs to be flipped in your world view. Don't think, 'I've got X to invest. What return can I realistically expect?' That is thinking Industrial Age. Rather think, 'I want a X million USD portfolio in Y years. How much is it going to cost me?' Because Information Age companies have Market to Book Value Ratios of 10:1.0 or above, the invested financial capital is actually less than 10% of the value of the company. In order to get in, you will need to contribute a nominal amount of money, but that is minor compared to the knowledge capital you are bringing to the table.
Now, let's get back to that 35 year old with a $10,000 IRA and a desire to get high returns while accepting higher risks. The numbers we have been using are overly simplistic. There will be losses. However, one does not hold the same position indefinitely. The increase in Market to Book Value from an initial 5:1 to 12:1, increases your return every time you change positions from a mature investment to a new one. Taking everything into account, a realistic Industrial Age return is about 18%. In other words, the return for pre-IPO investments in the Industrial Age were not much different than for the more liquid and generally lower risk publicly traded investment strategies.
However, with the Information Age percentages and ratios, a realistic return is in the 65% range. So $10,000 X 1.65^32 = $91,093,253,745. Of course, you are not likely to actually achieve such a result. While GWP will grow dramatically over the next 30 years, it will not support everyone achieving such results. In fact, because that isn't possible, the Investment Markets are going to have truly profound shocks as they adjust to the new economic realities of the Information Age. We explore these shocks and the new points of equalibria in The Future 101. For now, however, look at the following chart:
What will happen in reality is that sometime prior to the age of 50, the investor will decide that the portfolio is large enough, there is no reason to continue to work at their current productive activity that is not optimal and they will choose to 'retire' with a seven figure income and an eight figure net worth. Retire, of course, means to work how one wishes, not how one must. Additionally, the amount that needs to be reinvested each year keeps increasing and, at some point, the investor will have neither the time nor the opportunities to continue the exponential growth in portfolio valuation. However, many will choose to continue to allocate a portion of their income to new opportunities, thereby assuring, albeit at a lower rate, continued growth in portfolio value and income.
This is a fundamental and profound change in how investments affect personal finance. Rather than preparing for retirement, which will actually be closer to 80 than 67 for the 35 year old of today, the person will be earning their liberation. Long before reaching the end of their productive years, most people will be liberated from the need to consider personal finances when considering their preferred productive activity.
Of course, the sooner you begin your investment program, the sooner you will reach your point of liberation. In the example above, it takes 15 years. In order to start, you will need three things.
The first two can be easily acquired by subscribing to The Future 101. You are at an Abstract site and this is an Abstract. In The Future 101 we will discuss all aspects of building a liberating portfolio. You will gain knowledge that will directly improve the quality of your investment decisions.
Additionally, our alumni will have the opportunity to collaborate with entrepreneurs, investors, strategic partners and advisers through Fellowship in The Polymathic Institute. It is specifically designed to be the opportunity rich and success prone environment that you will need. It will not only provide you with a steady stream of investment opportunities, it will also provide you with the network and infrastructure you need to successfully enter a Knowledge Class career.
Parenthetical to this article, it will also provide you with an intellectually rich social environment. Unlike high IQ societies, there is no test score required for Fellowship although the median IQ of Fellows will undoubtedly be very high. Rather, it will be a community characterized by extraordinary intelligence, unrelenting drive, well tempered vision and a bias toward excellence.
The information presented here is in complete conformity with the 'save the world by saving ourselves' strategy that I discuss often here and at the premium service. As you build your portfolio, you will be enabling Information Age enterprises that will move people out of the Industrial Age economy, thereby indemnifying them against the worst of the 'train wreck.' Simultaneously, by reducing the supply of Industrial Age job seekers, you will be putting downward pressure on Technological Unemployment and putting upward pressure on Industrial Age wages.
If you are a 'look before you leap' sort of person, I suggest that you read the Abstracts here and then subscribe to The Future 101. It is a nominal risk for the opportunity to place yourself on a far superior career, wealth and life track. Some of those of great vision and a high level of self confidence may wish to move directly to Fellowship. If you wish to consider this option, contact me at Michael.W.Ferguson@hotmail.com.
I look forward to your continuing involvement in this, a great personal and societal cause and adventure.
Within ten, perhaps twenty, years we will all have 'smart garages'. We will drive in every evening and every morning the garage will have done the necessary maintenance, washed and detailed our car and we will be ready to go without ever thinking about the details. No more changing brake pads for anyone.
But for now, the rock star is an auto mechanic and he is selling five of his days per week to an economy that needs the work done. In return, he is allowed to live two days per week. If you ask him if he wants his job, of course he'll say no. However, if you tell him he can be a rock star after all, he will be in line, taking one of the gigs, before you can blink.
Almost everyone has productive urges. They really don't want to be completely indolent. They simply want to do the productive things that they want to do without concern for how much money they will or will not earn from it. They want to do it as much as they want to do it, not how much they need to do it in order to have enough money. It is from this frustration over inappropriate work rather than a desire to avoid work, that the attractiveness of The Venus Project and The Zeitgeist Movement originates.
One of the most extraordinary opportunities to work 'how you wish rather than how you must' arises from the dramatic changes that are taking place in the investment markets. If you read the Abstract, The Death of Capitalism, you will, actually, have all the information you need to understand what it is. However, I will summarize it here, as well.
In the Abstract I show you that Industrial Age companies had equity constrained growth of about 23% per year and typically had Market to Book Value Ratios around 2.5. Information Age companies have equity constrained growth rates of 67% and Market to Book Value Ratios in the range of 12. Because of this fundamental and dramatic change in the structure of Financial Markets, nearly everyone actually has their thinking about investing exactly backward.
Because the value of an Industrial Age company was so concentrated in the financial capital, both contributed and retained, people have thought about how much portfolio value they can have in Y years with an initial investment of X. For example, suppose a 35 year old has a $10,000 portfolio that they might like to roll over into an IRA and pursue higher risk, higher return investment opportunities.
If they set their return expectations at, say, 18% (historically the S&P 500 returns about 11%) they will expect a portfolio valuation of $1,996,292.77 thirty two later when they retire at the age of 67. However, they understand that inflation will have devalued their portfolio and it will likely be, in today's dollars, valued at about $900,000. They will need to lower their return expectations in order to prudently lower their risk, after retirement, likely to about 7% after inflation. That means that they will have about $63,000 of retirement income in addition to their Social Security and/or pension income.
There is one more, very important aspect that most people don't know or don't think about. As a mass market investor, when you buy stock, it is almost always from the secondary market. What that means is that you are not investing in a company. The company gets none of your money. Rather, you are making a wager. You are betting that the prospects for return on investment are more than supported by the purchase price. With the fullness of time, if you are correct, you win and the seller loses. If not, it is the other way around. You lose and the seller wins.
It isn't quite a zero sum game because the value of stocks do tend to increase over time and most, though not all, dividend a portion of their earnings to the owner of record. However, it has nothing to do with investing in the future economy or in the businesses themselves. Wall Street, in this manifestation, which is by far its largest one, is essentially a huge casino where the house take, effectively, is negative. If you win, you may be saving yourself, but you are doing nothing to save the world. Also, above the growth in market valuation, it is a zero sum game and your win is someone's loss.
However, there is a primary market for securities, as well. It is totally different from the casinos such as the New York, NASDAQ, London, Tokyo, Euronext, Deutsche Borse, Borsa Italiana, et al stock exchanges. It is private. Your purchase funds the business itself. This has been primarily a playground for the wealthy, either through Venture Capital partnerships or individually as 'Investment Angels'. It is a very significant component of the phenomenon of 'the rich getting richer' and the resultant income and wealth inequalities. The only significant exceptions are the IPOs where individual investors do get to invest in the company directly, at least in part. Most IPO's also cash out early round investors and as such are secondary market purchases.
The risks in the private, primary markets are, indeed, higher, but the rewards are also higher. When the Industrial Age companies could not grow faster than 23% per year without additional equity infusions, for the small investor, the risk was not justified by the potential return. However, with the 67% equity constrained returns of Information Age companies, the dynamic is totally different.
In The Death of Capitalism Abstract, I show that Industrial Age companies typically will have an equity constrained growth rate of about 23% and a Market to Book Value Ratio of 2.5:1.0. On the other hand, Information Age companies typically will have a equity constrained growth rate of 67% and a Market to Book Value Ratio of 12:1.0. You will know whether you properly appreciate the difference based upon whether it stuns you or not. If it doesn't, you need to think about it more. If it does, then you understand that the world of business and investment markets is undergoing its greatest upheaval in history. It will enable a democritization of wealth.
An Industrial Age company with a billion dollar Market Value will likely have a 400 million USD Book Value. Suppose that the company had been started ten years earlier and the first round of investors got 50% of the company for 100% of the equity contribution. A simple calculation tells us that the investors must have put in 400 million USD / (1.23^10) =50,467,161.90 USD. Their current market value is 500 million USD which translates to a respectable 25.77% annual return. In order to buy a $1,000,000 portfolio ten years hence, the cost would be 50,467.16 USD today. Most of us don't have that amount of risk capital available to us.
Now let's consider the billion dollar Information Age company. Its book value will be 83,333,333 USD. At a 67% annual equity constrained growth rate, the contributed capital ten years prior would have been 83,333,333.33 / (1.67^10) =493,917.08 USD. However, because of the high competition for the very high ROIs that will typify Information Age companies, the initial investors only received 20% of the company for a Market Value of 200,000,000. The annual return is 82.28%. More importantly, you can buy $1,000,000 of portfolio ten years hence for just 2,469.59 USD today! Many, probably most, of us do have that amount available for risk capital.
As we discuss in The Future 101, it is also very significant that in the Information Age scenario, the entrepreneur kept 80% of the company versus keeping 50% of the company in the Industrial Age scenario. It not only enables entrepreneurship in the Information Age, it makes it much more attractive.
So that is the light switch that needs to be flipped in your world view. Don't think, 'I've got X to invest. What return can I realistically expect?' That is thinking Industrial Age. Rather think, 'I want a X million USD portfolio in Y years. How much is it going to cost me?' Because Information Age companies have Market to Book Value Ratios of 10:1.0 or above, the invested financial capital is actually less than 10% of the value of the company. In order to get in, you will need to contribute a nominal amount of money, but that is minor compared to the knowledge capital you are bringing to the table.
Now, let's get back to that 35 year old with a $10,000 IRA and a desire to get high returns while accepting higher risks. The numbers we have been using are overly simplistic. There will be losses. However, one does not hold the same position indefinitely. The increase in Market to Book Value from an initial 5:1 to 12:1, increases your return every time you change positions from a mature investment to a new one. Taking everything into account, a realistic Industrial Age return is about 18%. In other words, the return for pre-IPO investments in the Industrial Age were not much different than for the more liquid and generally lower risk publicly traded investment strategies.
However, with the Information Age percentages and ratios, a realistic return is in the 65% range. So $10,000 X 1.65^32 = $91,093,253,745. Of course, you are not likely to actually achieve such a result. While GWP will grow dramatically over the next 30 years, it will not support everyone achieving such results. In fact, because that isn't possible, the Investment Markets are going to have truly profound shocks as they adjust to the new economic realities of the Information Age. We explore these shocks and the new points of equalibria in The Future 101. For now, however, look at the following chart:
| Age | Beginning | Income | Ending |
| 36 | 10,000 | 6,500 | 16,500 |
| 37 | 16,500 | 10,725 | 27,225 |
| 38 | 27,225 | 17,696 | 44,921 |
| 39 | 44,921 | 29,199 | 74,120 |
| 40 | 74,120 | 48,178 | 122,298 |
| 41 | 122,298 | 79,494 | 201,792 |
| 42 | 201,792 | 131,165 | 332,957 |
| 43 | 332,957 | 216,422 | 549,378 |
| 44 | 549,378 | 357,096 | 906,474 |
| 45 | 906,474 | 589,208 | 1,495,683 |
| 46 | 1,495,683 | 972,194 | 2,467,876 |
| 47 | 2,467,876 | 1,604,120 | 4,071,996 |
| 48 | 4,071,996 | 2,646,797 | 6,718,793 |
| 49 | 6,718,793 | 4,367,216 | 11,086,009 |
| 50 | 11,086,009 | 7,205,906 | 18,291,915 |
This is a fundamental and profound change in how investments affect personal finance. Rather than preparing for retirement, which will actually be closer to 80 than 67 for the 35 year old of today, the person will be earning their liberation. Long before reaching the end of their productive years, most people will be liberated from the need to consider personal finances when considering their preferred productive activity.
Of course, the sooner you begin your investment program, the sooner you will reach your point of liberation. In the example above, it takes 15 years. In order to start, you will need three things.
- You will need a more complete understanding of the Information Age investment markets.
- You will need a superior knowledge of futurity so that you can make superior investment decisions.
- You will need an opportunity rich and success prone productive environment that can bring you a steady stream of superior Information Age investment opportunities.
The first two can be easily acquired by subscribing to The Future 101. You are at an Abstract site and this is an Abstract. In The Future 101 we will discuss all aspects of building a liberating portfolio. You will gain knowledge that will directly improve the quality of your investment decisions.
Additionally, our alumni will have the opportunity to collaborate with entrepreneurs, investors, strategic partners and advisers through Fellowship in The Polymathic Institute. It is specifically designed to be the opportunity rich and success prone environment that you will need. It will not only provide you with a steady stream of investment opportunities, it will also provide you with the network and infrastructure you need to successfully enter a Knowledge Class career.
Parenthetical to this article, it will also provide you with an intellectually rich social environment. Unlike high IQ societies, there is no test score required for Fellowship although the median IQ of Fellows will undoubtedly be very high. Rather, it will be a community characterized by extraordinary intelligence, unrelenting drive, well tempered vision and a bias toward excellence.
The information presented here is in complete conformity with the 'save the world by saving ourselves' strategy that I discuss often here and at the premium service. As you build your portfolio, you will be enabling Information Age enterprises that will move people out of the Industrial Age economy, thereby indemnifying them against the worst of the 'train wreck.' Simultaneously, by reducing the supply of Industrial Age job seekers, you will be putting downward pressure on Technological Unemployment and putting upward pressure on Industrial Age wages.
If you are a 'look before you leap' sort of person, I suggest that you read the Abstracts here and then subscribe to The Future 101. It is a nominal risk for the opportunity to place yourself on a far superior career, wealth and life track. Some of those of great vision and a high level of self confidence may wish to move directly to Fellowship. If you wish to consider this option, contact me at Michael.W.Ferguson@hotmail.com.
I look forward to your continuing involvement in this, a great personal and societal cause and adventure.
Tuesday, January 24, 2012
Your Career in the Knowledge Class
The Future 101 presents, at the graduate level, an objectively supportable world view and a superior knowledge of futurity. As such it is primarily an educational service. It imparts knowledge, however, that veritably begs to be used. You may choose to use it by joining our Global Community of Action. It is intended to be a route to early entrance into the Knowledge Class.
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:
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.
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.
Monday, December 26, 2011
Saving the World by Saving Ourselves
The political system is broken and is likely to be of little or no help in solving the problems of the next decade. In reality, it doesn't matter who is nominated or who is elected. It doesn't matter what political party or coalition controls the legislative bodies. The most that these outcomes will manage is to change the scenery on our road to Industrial Age perdition, i.e. the train wreck. Simply put, Information Age problems will not yield to Industrial Age solutions. In fact, as is the case with Technological Unemployment, the attempt to do so will actually exacerbate the problem.
Even if enlightened leadership attempted to implement Information Age solutions to the four horsemen of our particular apocalypse, the train wreck, their efforts would be successfully demagogued to a poorly educated and generally inattentive electorate. The enlightened leadership would be promptly voted out of office. Of course, this hypothetical situation has no relevance to the current, actual one. There is no potential enlightened political leadership anywhere in sight. I have tried to inform the political establishment about The Future 101, but to date, there has been no response. I expect none in the future.
In the U.S., in 2008, the Tea Party placed into Congress a significant number of Representatives and a few Senators who stand on principle and are not prepared to compromise with opponents that they believe to be entirely incorrect in their policies. While the nation has not moved particularly closer to the Tea Party - there is no Tea Party consensus anywhere in sight - the Republican nominating process and the critical swing districts, especially in the Senate, are still vulnerable. The Right may become even more intransigent.
Now, the Occupy Wall Street group is mobilizing the other side. It is quite possible that they will place into the next Congress, members who are unwilling to compromise with the Tea Party Caucus. This may not be an organized effort as it was with the Tea Party. They are intending to hold a National Assembly in Philadelphia on July 4, 2012. However, even if they are not successful in achieving the same level of organization, it is very likely that a significant number of very Liberal politicians will use the rhetoric of OWS to gain support. Given the enthusiasm sweeping the nation, it will probably work.
Information Age problems will not yield to Industrial Age solutions. On both sides of the political divide, that is what is being proposed. Between the increasing political gridlock and the inability to disengage from the battle long enough to see the larger, Information Age picture, our short term prognosis is poor. As I discuss extensively in The Future 101 premium site, any attempts to increase economic growth, whether based upon the Conservative's preference for supply side stimulation or the Liberals preference for demand side stimulation or any combination thereof will almost surely increase the unemployment rate.
To simplify our considerations here, remember AT&T's 'forklifts that drive themselves'. If the Conservatives provide incentives to business, as often as not, rather than investing in job creation, the businesses will buy the self-driving forklifts and, thereby, increase unemployment. If the Liberals provide more purchasing power, demand will increase, new facilities will need to be built and driverless forklifts, again, will increase unemployment. Clearly, Information Age solutions are required.
Certainly, rising unemployment and increasing income disparities between the emerging Information Age Knowledge Class and the prevailing incomes of the Industrial Age 'jobs' market are becoming cornerstones of the political divides. It is not perceived as an Industrial Age vs. Information Age problem, however, In fact, the recent rise of a clarion call for the 99% to rise up against the 1% is actually framing the problem in almost feudal terms. If Information Age problems won't yield to Industrial Age solutions, they most certainly won't yield to Agricultural Age ones.
The growth in income within the 1% has been primarily in 'business income' not salaries or capital gains. In other words, the 1% is getting its increasing income from the very same productivity gains that are causing the reduction in employment opportunities and remuneration for the 'workers'. This is not a cabal or a conspiracy of a passive investment class. In fact, if you subscribe to The Future 101 premium site, you will come to understand that the passive investor class is an endangered species. This is, in reality, evidence of the emerging Knowledge Class.
The arbitrary segregation of 1% from the 99% rather than the 2% from the 98%, or the 3% from the 97% is obfuscating the actual process that is taking place. Essentially, a growing Knowledge Class, with its characteristic seven figure incomes, is pushing out the old 1%. It is not yet dominating the upper 1%, but it will soon. It will then grow to 2%, then 3%, then 4%. This growth in the Knowledge Class when viewed as such rather than in a 'class warfare' 99% vs. 1% way, is really our only opportunity to avert, in any degree, the first item of the train wreck, the very high unemployment. In the end, the Knowledge Class will comprise about 20% of the population. By 2040, 80% of households will have real income that would put them in the top 1% today. The closer we can get to those numbers prior to the train wreck, the less severe it will be.
The mechanism of 'Saving the world by saving ourselves' is actually a bit more complex than that. When a person leaves an Industrial Age 'job' to become a member of the Knowledge Class, not only has (s)he averted the train wreck personally, they also are decreasing, by one, the number of workers competing for the disappearing Industrial Age jobs and, thereby, ameliorating the problems for those still in the Industrial Age. In other words, they are improving the supply and demand forces that are causing real wages to stagnate or fall.
Many of the Enterprise Networks, including the one I intend to start, Polymathica Enterprises, are structured around the emergence of a Culture of Affluence. These issues of culture are just as significant as the Economic ones of the Knowledge Class and technological unemployment. As we saw, political solutions to our Economic problems are futile. They are also useless in addressing our differences in values. In fact, in the 'Death of the Nation State, I 'argue that
Another person argued that 'reality trumps principles.' Indeed it does. We do, at times, compromise our principles because it is forced upon us by reality. However, that will not save us from the long string of examples of principled positions that are not forced by reality, such as the death penalty, abortion rights, tax policies, marriage laws, teaching evolution and intelligent design, etc.
There have been a few people who have tried to argue that we do share common principles, citing commitments to liberal democracy, etc. I will grant that there is some merit in that argument. The Cultures of Affluence that spring from the Western heritage will share some underlying principles that may not be shared with the Eastern, Indic or Islamic heritages. While we do share some common principles, to an increasing degree, we do not share enough of them.
I make the prediction that a first principle of the global Information Age civilization is that no person should be required to live under a body of laws, programs and policies that they consider to be fundamentally unjust. This seems an impossible goal for many, perhaps most, people. We have become inured to what we consider unjust laws. However, the emergence of The Cultures of Affluence and the cultural cocoons that will be created by culturally defined communities, both real and virtual, will undermine this willingness to accept what we consider to be systemic miscarriages of justice.
While this requires a substantial rewrite of the institutions of civilization, I believe the benefit is worth the effort. We are, perhaps, seeing the beginning of the process with the potential agreement between Future Cities Development, Inc. and the government of Honduras. Whether this is ultimately successful, the basic notion will prevail. It all begins with the construction of Enterprise Networks.
By creating these culturally defined Enterprise Networks and thereby creating a more positive vision of the future, we are relieving at least some of the pressure of the impending 'divorce' of America. People will slowly move from the fights, arguments and angry rhetoric of groups with essentially irreconcilable differences to discussions about the ways and means of living together but separately. While no system will ever be perfect, we will craft an acceptable one.
We are also building, through Enterprise Networks, the replacement to the Industrial Age corporation in advance of its actual demise. By doing so, we are creating an enabling environment for entrance into the Knowledge Class. We are also allowing our economy to make a soft landing in the post corporate world. It is worth pointing out again, that the 1% is gaining its income from Business Income, not from dividends or capital gains. This is evidence that the post corporate world is already emerging.
I would be the first to agree that creating an Internet business providing content, products and services to a highly nichified market is difficult. However, it will get easier as the traffic aggregators become more Information Age defined. When it is successful, a Knowledge Class member has been created. The live anywhere option is achieved and income will typically jump to Knowledge Class levels. As I discuss elsewhere here and explore deeply in the premium service, the '1,000 True Fans' logic is the logic of the Information Age. However, the numbers will be more like 100,000 virtual CD's sold at $15 each with the artist retaining 70% to 85% of the proceeds. Or, as in my case, 50,000 subscribers at $54.95 per year. These are not going to be exceptions. By the train wreck, these success stories could comprise 5% or more of the workforce.
Sadly, the last of the four components of the train wreck, the death of the Industrial Age cities has no good solution. By 2040 the median home price will be nearing 2.5 million 2012USD and 7,000 ft.². With the home price for a family at the poverty level being characteristically around 600K to 700K 2012USD, there will simply not be any market for 75% of the homes today. Not only are they too small, their density is too great and they are not of sufficiently high quality. They will be what the real estate industry now calls 'a tear down.' It is worth the value of the lot less the cost to remove the house.
In higher end areas this process is already well advanced. In my vicinity, 3,000 ft.² houses are being torn down and replaced by 8,000 ft.² houses. The smaller houses are almost never bought for occupancy. This is the beginning of a trend that will sweep the developed world over the next thirty years. Personally, your only defense is to join the Knowledge Class and get out before it happens to you. Macro-economically, this is both good and bad. Clearly an enormous amount of Net Worth will disappear. However, the rebuilding of the developed world and the creation of affluent communities in currently underdeveloped regions will create, primarily from 2020 onward, an unprecedented global Real Estate boom.
In all of these actions, we will be reducing the severity of the Transformation. For many of us, by the time the train hits the wall, we will be safely ensconced in a Culture of Affluence in a Knowledge Class career and, perhaps, even in a Boutique Village in an Information Age scaled house. For us, personally, the train wreck will be averted. It is unlikely that we can avert it for everyone. Most people will cling to the familiar to the very end. The Information Age solutions will be politically unfeasible to implement on a large scale. However, fewer victims of the train wreck, coupled with the much higher GDP of the Information Age, will make it, comparatively, much more bearable.
I do not know if, in my effort to get your subscription to The Future 101 and provide you with the practical tools of a community of action, I should emphasize that you are saving yourself or that you are saving the world. I do not see it as an either/or. I consider it to be most auspicious that we can do both - that, for once, self-interest and altruism are more or less congruent. Your decision is an ethical win-win.
Either way, if you are to be involved, your first step will be to subscribe to The Future 101 premium site. From there, perhaps you will choose to move on to Enterprise Networks and/or the True Fans strategy. In this way you are taking concrete and positive steps toward 'Saving the world by saving yourself.' You will be undertaking what is both a personally and societally laudable course of action. Once again, I look forward to seeing you inside.
With Warm Regards,
Michael Ferguson
Even if enlightened leadership attempted to implement Information Age solutions to the four horsemen of our particular apocalypse, the train wreck, their efforts would be successfully demagogued to a poorly educated and generally inattentive electorate. The enlightened leadership would be promptly voted out of office. Of course, this hypothetical situation has no relevance to the current, actual one. There is no potential enlightened political leadership anywhere in sight. I have tried to inform the political establishment about The Future 101, but to date, there has been no response. I expect none in the future.
In the U.S., in 2008, the Tea Party placed into Congress a significant number of Representatives and a few Senators who stand on principle and are not prepared to compromise with opponents that they believe to be entirely incorrect in their policies. While the nation has not moved particularly closer to the Tea Party - there is no Tea Party consensus anywhere in sight - the Republican nominating process and the critical swing districts, especially in the Senate, are still vulnerable. The Right may become even more intransigent.
Now, the Occupy Wall Street group is mobilizing the other side. It is quite possible that they will place into the next Congress, members who are unwilling to compromise with the Tea Party Caucus. This may not be an organized effort as it was with the Tea Party. They are intending to hold a National Assembly in Philadelphia on July 4, 2012. However, even if they are not successful in achieving the same level of organization, it is very likely that a significant number of very Liberal politicians will use the rhetoric of OWS to gain support. Given the enthusiasm sweeping the nation, it will probably work.
Information Age problems will not yield to Industrial Age solutions. On both sides of the political divide, that is what is being proposed. Between the increasing political gridlock and the inability to disengage from the battle long enough to see the larger, Information Age picture, our short term prognosis is poor. As I discuss extensively in The Future 101 premium site, any attempts to increase economic growth, whether based upon the Conservative's preference for supply side stimulation or the Liberals preference for demand side stimulation or any combination thereof will almost surely increase the unemployment rate.
To simplify our considerations here, remember AT&T's 'forklifts that drive themselves'. If the Conservatives provide incentives to business, as often as not, rather than investing in job creation, the businesses will buy the self-driving forklifts and, thereby, increase unemployment. If the Liberals provide more purchasing power, demand will increase, new facilities will need to be built and driverless forklifts, again, will increase unemployment. Clearly, Information Age solutions are required.
Certainly, rising unemployment and increasing income disparities between the emerging Information Age Knowledge Class and the prevailing incomes of the Industrial Age 'jobs' market are becoming cornerstones of the political divides. It is not perceived as an Industrial Age vs. Information Age problem, however, In fact, the recent rise of a clarion call for the 99% to rise up against the 1% is actually framing the problem in almost feudal terms. If Information Age problems won't yield to Industrial Age solutions, they most certainly won't yield to Agricultural Age ones.
The growth in income within the 1% has been primarily in 'business income' not salaries or capital gains. In other words, the 1% is getting its increasing income from the very same productivity gains that are causing the reduction in employment opportunities and remuneration for the 'workers'. This is not a cabal or a conspiracy of a passive investment class. In fact, if you subscribe to The Future 101 premium site, you will come to understand that the passive investor class is an endangered species. This is, in reality, evidence of the emerging Knowledge Class.
The arbitrary segregation of 1% from the 99% rather than the 2% from the 98%, or the 3% from the 97% is obfuscating the actual process that is taking place. Essentially, a growing Knowledge Class, with its characteristic seven figure incomes, is pushing out the old 1%. It is not yet dominating the upper 1%, but it will soon. It will then grow to 2%, then 3%, then 4%. This growth in the Knowledge Class when viewed as such rather than in a 'class warfare' 99% vs. 1% way, is really our only opportunity to avert, in any degree, the first item of the train wreck, the very high unemployment. In the end, the Knowledge Class will comprise about 20% of the population. By 2040, 80% of households will have real income that would put them in the top 1% today. The closer we can get to those numbers prior to the train wreck, the less severe it will be.
The mechanism of 'Saving the world by saving ourselves' is actually a bit more complex than that. When a person leaves an Industrial Age 'job' to become a member of the Knowledge Class, not only has (s)he averted the train wreck personally, they also are decreasing, by one, the number of workers competing for the disappearing Industrial Age jobs and, thereby, ameliorating the problems for those still in the Industrial Age. In other words, they are improving the supply and demand forces that are causing real wages to stagnate or fall.
Many of the Enterprise Networks, including the one I intend to start, Polymathica Enterprises, are structured around the emergence of a Culture of Affluence. These issues of culture are just as significant as the Economic ones of the Knowledge Class and technological unemployment. As we saw, political solutions to our Economic problems are futile. They are also useless in addressing our differences in values. In fact, in the 'Death of the Nation State, I 'argue that
- Politics is the art of compromise
- It is wrong to compromise one's principles
- We no longer share common principles
- Therefore politics is wrong
Another person argued that 'reality trumps principles.' Indeed it does. We do, at times, compromise our principles because it is forced upon us by reality. However, that will not save us from the long string of examples of principled positions that are not forced by reality, such as the death penalty, abortion rights, tax policies, marriage laws, teaching evolution and intelligent design, etc.
There have been a few people who have tried to argue that we do share common principles, citing commitments to liberal democracy, etc. I will grant that there is some merit in that argument. The Cultures of Affluence that spring from the Western heritage will share some underlying principles that may not be shared with the Eastern, Indic or Islamic heritages. While we do share some common principles, to an increasing degree, we do not share enough of them.
I make the prediction that a first principle of the global Information Age civilization is that no person should be required to live under a body of laws, programs and policies that they consider to be fundamentally unjust. This seems an impossible goal for many, perhaps most, people. We have become inured to what we consider unjust laws. However, the emergence of The Cultures of Affluence and the cultural cocoons that will be created by culturally defined communities, both real and virtual, will undermine this willingness to accept what we consider to be systemic miscarriages of justice.
While this requires a substantial rewrite of the institutions of civilization, I believe the benefit is worth the effort. We are, perhaps, seeing the beginning of the process with the potential agreement between Future Cities Development, Inc. and the government of Honduras. Whether this is ultimately successful, the basic notion will prevail. It all begins with the construction of Enterprise Networks.
By creating these culturally defined Enterprise Networks and thereby creating a more positive vision of the future, we are relieving at least some of the pressure of the impending 'divorce' of America. People will slowly move from the fights, arguments and angry rhetoric of groups with essentially irreconcilable differences to discussions about the ways and means of living together but separately. While no system will ever be perfect, we will craft an acceptable one.
We are also building, through Enterprise Networks, the replacement to the Industrial Age corporation in advance of its actual demise. By doing so, we are creating an enabling environment for entrance into the Knowledge Class. We are also allowing our economy to make a soft landing in the post corporate world. It is worth pointing out again, that the 1% is gaining its income from Business Income, not from dividends or capital gains. This is evidence that the post corporate world is already emerging.
I would be the first to agree that creating an Internet business providing content, products and services to a highly nichified market is difficult. However, it will get easier as the traffic aggregators become more Information Age defined. When it is successful, a Knowledge Class member has been created. The live anywhere option is achieved and income will typically jump to Knowledge Class levels. As I discuss elsewhere here and explore deeply in the premium service, the '1,000 True Fans' logic is the logic of the Information Age. However, the numbers will be more like 100,000 virtual CD's sold at $15 each with the artist retaining 70% to 85% of the proceeds. Or, as in my case, 50,000 subscribers at $54.95 per year. These are not going to be exceptions. By the train wreck, these success stories could comprise 5% or more of the workforce.
Sadly, the last of the four components of the train wreck, the death of the Industrial Age cities has no good solution. By 2040 the median home price will be nearing 2.5 million 2012USD and 7,000 ft.². With the home price for a family at the poverty level being characteristically around 600K to 700K 2012USD, there will simply not be any market for 75% of the homes today. Not only are they too small, their density is too great and they are not of sufficiently high quality. They will be what the real estate industry now calls 'a tear down.' It is worth the value of the lot less the cost to remove the house.
In higher end areas this process is already well advanced. In my vicinity, 3,000 ft.² houses are being torn down and replaced by 8,000 ft.² houses. The smaller houses are almost never bought for occupancy. This is the beginning of a trend that will sweep the developed world over the next thirty years. Personally, your only defense is to join the Knowledge Class and get out before it happens to you. Macro-economically, this is both good and bad. Clearly an enormous amount of Net Worth will disappear. However, the rebuilding of the developed world and the creation of affluent communities in currently underdeveloped regions will create, primarily from 2020 onward, an unprecedented global Real Estate boom.
In all of these actions, we will be reducing the severity of the Transformation. For many of us, by the time the train hits the wall, we will be safely ensconced in a Culture of Affluence in a Knowledge Class career and, perhaps, even in a Boutique Village in an Information Age scaled house. For us, personally, the train wreck will be averted. It is unlikely that we can avert it for everyone. Most people will cling to the familiar to the very end. The Information Age solutions will be politically unfeasible to implement on a large scale. However, fewer victims of the train wreck, coupled with the much higher GDP of the Information Age, will make it, comparatively, much more bearable.
I do not know if, in my effort to get your subscription to The Future 101 and provide you with the practical tools of a community of action, I should emphasize that you are saving yourself or that you are saving the world. I do not see it as an either/or. I consider it to be most auspicious that we can do both - that, for once, self-interest and altruism are more or less congruent. Your decision is an ethical win-win.
Either way, if you are to be involved, your first step will be to subscribe to The Future 101 premium site. From there, perhaps you will choose to move on to Enterprise Networks and/or the True Fans strategy. In this way you are taking concrete and positive steps toward 'Saving the world by saving yourself.' You will be undertaking what is both a personally and societally laudable course of action. Once again, I look forward to seeing you inside.
With Warm Regards,
Michael Ferguson
Wednesday, December 21, 2011
A Portal to Communities of Action
Within the Enterprise Networks, investors, even small ones, will find that 70%+ annual returns are not only possible, they are likely. Entrepreneurs, creatives, technologists and intellectuals, will find immediate, enabling tools that will allow them to keep up to 80% of their equity, even if they have little or no capital to contribute.
The Future 101 is a graduate level education on the emerging, global Information Age civilization. However, it is also a portal to communities of action that can provide you with early entrance into the profoundly affluent Knowledge Class. Knowledge Class incomes begin at $250K per year but typically, over time, will be in the seven figures.
And it all begins with a simple commitment of just 15¢ per day.
The combination of The Death of Capitalism and the emergence of crowdfunded Enterprise Networks presents risk tolerant, long term investors with a staggering opportunity What is important to success is not a large portfolio, but rather the knowledge, vision and courage to properly deploy a portfolio, even if it is of very modest size. Armed with the knowledge of The Transformation, acquired through the premium service, The Future 101, subscribers can utilize The Future 101 as a portal to Enterprise Networks and the opportunity to participate in annual returns of 70% or more. For perspective, $10,000 at an annual return of 70% is worth over $2,000,000 within ten years.
Simultaneously, entrepreneurs, creatives, technologists and intellectuals will have their Information Age careers enabled through Enterprise Networks. Because returns on financial capital are so high in Information Age enterprises, they will be able to retain most of their equity, rather than, as was the case in the Industrial Age, ceding most of it to large scale, passive investors - Investment Angels and Venture Capitalists. Through crowdfunding exemptions, currently moving through the U.S. Congress, access to capital, beginning with the R&D and start up phases will be feasible, even if the entrepreneurs, creatives, technologists and intellectuals have little or not capital to contribute themselves.
Through collaboration in Enterprise Networks, the critical access to customers and markets, defined in Information Age terms, will become cost effective. This is a topic that we discuss extensively in The Future 101. Essentially, much of the current inefficiencies in the market place are the result of an inability of Industrial Age advertising vehicles to deliver Information Age markets. The emergence of Boutique Homepages and the Cultures of Affluence will rectify this situation to the benefit of Enterprise Network participants.
Any successful investment strategy or start-up begins with a superior knowledge of futurity. Right now, that means a knowledge of The Transformation. If you are not already familiar with it, you should begin by reading, at a minimum, the following tabs: The Future 101, The Income Explosion, The Age of Boutique Everything and The Death of Capitalism. Of course, reading it all is preferable and will generally require about one hour of your time.
The Information Age has arrived and with it a fundamental change has taken place in the financial structure of businesses and the investment markets. Properly understood and executed, it will allow aspiring entrepreneurs and visionary investors to achieve far superior results than anything that was possible in the Industrial Age. In fact, with proper environments they will likely, over the next couple of decades, take over the global economy.
Simultaneously, Enterprise Networks will replace large, hierarchical corporations as the dominant enterprise structure. Simply put, they will out compete corporations in the market place. They also, because the structure is more consistent with Information Age cultural sensibilities, will attract the very best talent. Here I will reproduce, for convenience, the organizational chart that I present in the article about Enterprise Networks.
We see that the Enterprise Network retains the economies of scale and cost effective access to administrative expertise. However, because each enterprise is under autonomous management, the management teams, themselves, are incentivized in a manner more similar to a stand alone business. Each can respond rapidly and effectively to changing market, technological and demographic conditions.
The Enterprise Network also has the unintended result of avoiding the $1.0 million or $2.0 million limitation placed on the crowdfunding exemptions. You will note that the stylized Enterprise Network depicted here has fourteen separate enterprises, and, consequently, in aggregate, can raise up to $28 million per year of new equity. This is not just a contrived avoidance of the intentions of the legislation. In the Industrial Age, these could very well be separate enterprises. It is simply a matter of Industrial Age legislation not properly anticipating Information Age economic structures.
Subscribing to The Future 101
The Future 101 is a premium informational site that presents an objectively supportable world view and a superior knowledge of futurity. Its cost is $54.95 per year. It is comprised of approximately 3,000 to 5,000 words of graduate level text and between two and three hours of audiocasts per week. In this sense, it is approximately equivalent to two three semester credit courses which works out to a ridiculously low $9.16 per semester credit. Its cost works out to about one USD per week.
As a basic cultural literacy for the emerging, global, Information Age civilization, it is, by itself, a real bargain. However, on a regular basis, I will also be providing subscribers with the opportunity to sign up for mailing lists related to various Enterprise Networks. This will be at no extra cost, although should an Enterprise Network contact you, they will undoubtedly have their own set of requirements for membership.
The Future 101, in addition to being an educational site, also becomes a portal to a growing community of action. These are the people who will be 'Saving the world by saving themselves.' These are the people who will be the first to enter the profoundly affluent, Information Age Knowledge Class. These are the people who will be providing you, as a crowdfunding investor, with opportunities to earn 70%+ return on your investment. These are the people who will be providing you, as an entrepreneur, creative, technologist or intellectual, with the enabling financial, knowledge and human capital you need to succeed. These are the people who will be creating the Enterprise Networks that will give you ready and cost effective access to your market.
I strongly encourage you to read all of the articles here at The Future 101 Abstracts. However, I am giving you these articles at no cost with the purpose of enticing some of you, the most visionary of you, to subscribe to The Future 101 and, over time, to join an Enterprise Network in a capacity that is proper for you.
As one final point, I want to clarify that Enterprise Networks are 'bounded opportunity rich and success prone productive environments.' They are not a restructured corporation. Some people will likely enter with the intent to engage in 'Not-for-profit' activities. My anticipated Enterprise Network, Polymathica Enterprises, will undoubtedly include non-profit educational organizations.
So, while I want to make it clear that the Information Age will experience an income explosion and the Knowledge Class will be characterized by incomes in the seven figures 2011USD, the Cultures of Affluence actually mean that less emphasis will be placed on income numbers and more on the quality of life and self-actualization enabled by the lifestyle choices. This is so counter-intuitive for Industrial Age cultures, but the best way to reduce the emphasis on materialism is to have everyone satisfied with their material needs.
As one final point, I want to clarify that Enterprise Networks are 'bounded opportunity rich and success prone productive environments.' They are not a restructured corporation. Some people will likely enter with the intent to engage in 'Not-for-profit' activities. My anticipated Enterprise Network, Polymathica Enterprises, will undoubtedly include non-profit educational organizations.
So, while I want to make it clear that the Information Age will experience an income explosion and the Knowledge Class will be characterized by incomes in the seven figures 2011USD, the Cultures of Affluence actually mean that less emphasis will be placed on income numbers and more on the quality of life and self-actualization enabled by the lifestyle choices. This is so counter-intuitive for Industrial Age cultures, but the best way to reduce the emphasis on materialism is to have everyone satisfied with their material needs.
I end with this because, while I understand most people place significant emphasis on providing affluence for their family, the Information Age will climb Maslow's Hierarchy and the emphasis will evolve toward the concept of 'A Finely Crafted Life.' So, these communities of action, these Enterprise Networks and Cultures of Affluence, will not only 'Save the world by saving ourselves' in an economic sense. The hope is that it will also revitalize the soul of Western civilization.
I really hope to see you on the inside. You simply click on the subscribe button and then e-mail me with your preferred e-mail address.
With Warm Regards,
Michael Ferguson
Monday, December 19, 2011
More on 1,000 True Fans
Creatives come in all sorts of stripes. There are composers, authors, painters, sculptors, fashion designers, architects, inventors, pundits, floral arrangers, interior decorators, television producers, to name a few. In fact, in the article, "What will you be doing in the Information Age?" the first two categories I discuss are Designer and Content Creator, both 'Creatives'.
Whether producing video content or costume jewelry, all Creatives have one thing in common; they must find sufficient fans to pay the bills. The sad fact is that, today, few of them are succeeding. Most are putting forth enormous effort frequently with little or no tangible financial results. In some cases, such as the ad supported blog, the business model, itself, is broken beyond repair.
In many cases, it actually boils down to the simple problem of traffic acquisition. In other words, assuming that you have demonstrated that there is a market for your wares, it then becomes a matter of finding that market for less cost than the resulting revenue generated.
To this end, Technium discussed the idea of 1,000 True Fans. It suggests that the future may be characterized by countless creators who have found 1,000 enthusiasts who will provide them with $100 per year each in revenue. As the author, Kevin Kelly, states, $100 X 1,000 = $100,000 less some expenses is a living for most people.
While true and on the surface 1,000 doesn't sound that difficult, in practice, it is proving just short of impossible. There are exceptions, of course, and Technium discusses Amanda Hocking, a dramatic example. She actually is earning six figures per month. Yes, per month. However, she is notable precisely because she is one of just a handful of examples of a success. Also, she has not found 1,000 True Fans. She has found hundreds of thousands, perhaps millions, of them.
John Scalzi wrote a wonderful article entitled, "The Problem with 1,000 True Fans" that goes a long way in explaining why we have so few success stories. Key among these is a consideration of price elasticity. In other words, if my goal is to obtain $100,000 per year, I can, as Technium suggests, find 1,000 True Fans who support me with $100 per year. Or I could find 10,000 at $10. Or, on the other hand, 100 at $1,000. The Creative is faced with a dilemma. The market research required to determine where on the elasticity curve the optimum profit may be found is too expensive. Consequently, the Creative must guess and they usually guess wrong. Furthermore, for most Creatives, even if they guess correctly, it still won't be easy.
I emphasize again that this is important because Creatives will likely constitute the largest career category in the Information Age. Many of my readers who, presently, don't think they are likely to be one of them are going to turn out to be wrong. The imagination you are demonstrating by reading The Future 101 suggests that over time and over the Transformation, you will discover that it is your home. It is for me, despite spending nearly my whole career in Finance. The Transformation will be forcing many career changes.
However, this needs to be viable and, currently, save for the few notable exceptions, it is not. I have been personally going through this. Some of my readers have been as well. We all have discovered that there are two primary problems.
Suppose a Creative has a business model that requires finding 10,000@$10. Again, assume that the market is English speakers on the Internet, which is about 600 million people. That means that if the Creative searches randomly, one would find a True Fan in every 60,000 people contacted. If you need to talk to 60,000 people to get $10, there just is no way to do it cost effectively. You are doomed before you start.
Of course, we don't really search randomly. We make an effort to find places that distill the general population down to a much greater concentration of True Fan candidates. Even if we do find a place with a hundred times greater concentration, we still need to sort through 600 people to find one True Fan. While finding such a place can be exhilarating, in the final analysis, few of our True Fans are actually hanging out in these kinds of locations. Consequently, we may add a few hundred by this method, but, after that, we have no additional marketing options.
We are, I know I have been, attracted to the notion of WOM. In theory, for those familiar with the concept of Six Degrees of Separation, you can reach every one of your True Fans, simply by asking for some help from those sympathetic readers.
The second problem is that, when it comes to True Fans, rarely is it love at first sight. Most often, one becomes a True Fan through multiple exposures over time. This actually suggests that the middle pricing model, Technium's 1,000@$100 may be the most difficult price point to make work. What I mean by that, is that it is probably far easier to woo a few, say 100@$1,000, if the product output is amenable or to find a large number of candidates, say 10,000@$10, who aren't in love yet, but are willing to part with a little money to continue the process.
The upshot of these two factors is that, in the absence of a more effective aggregators, success will remain elusive. So, the first order of business is to stop quixotically charging off as a lone wolf, attempting to find your 1,000 or 10,000 or 100 True Fans and start working together with other Creatives who are searching for a similar audience or market. This is one of the ideas behind the Enterprise Network. In many cases, traffic is its most important asset.
In many cases, it actually boils down to the simple problem of traffic acquisition. In other words, assuming that you have demonstrated that there is a market for your wares, it then becomes a matter of finding that market for less cost than the resulting revenue generated.
To this end, Technium discussed the idea of 1,000 True Fans. It suggests that the future may be characterized by countless creators who have found 1,000 enthusiasts who will provide them with $100 per year each in revenue. As the author, Kevin Kelly, states, $100 X 1,000 = $100,000 less some expenses is a living for most people.
While true and on the surface 1,000 doesn't sound that difficult, in practice, it is proving just short of impossible. There are exceptions, of course, and Technium discusses Amanda Hocking, a dramatic example. She actually is earning six figures per month. Yes, per month. However, she is notable precisely because she is one of just a handful of examples of a success. Also, she has not found 1,000 True Fans. She has found hundreds of thousands, perhaps millions, of them.
John Scalzi wrote a wonderful article entitled, "The Problem with 1,000 True Fans" that goes a long way in explaining why we have so few success stories. Key among these is a consideration of price elasticity. In other words, if my goal is to obtain $100,000 per year, I can, as Technium suggests, find 1,000 True Fans who support me with $100 per year. Or I could find 10,000 at $10. Or, on the other hand, 100 at $1,000. The Creative is faced with a dilemma. The market research required to determine where on the elasticity curve the optimum profit may be found is too expensive. Consequently, the Creative must guess and they usually guess wrong. Furthermore, for most Creatives, even if they guess correctly, it still won't be easy.
I emphasize again that this is important because Creatives will likely constitute the largest career category in the Information Age. Many of my readers who, presently, don't think they are likely to be one of them are going to turn out to be wrong. The imagination you are demonstrating by reading The Future 101 suggests that over time and over the Transformation, you will discover that it is your home. It is for me, despite spending nearly my whole career in Finance. The Transformation will be forcing many career changes.
However, this needs to be viable and, currently, save for the few notable exceptions, it is not. I have been personally going through this. Some of my readers have been as well. We all have discovered that there are two primary problems.
Suppose a Creative has a business model that requires finding 10,000@$10. Again, assume that the market is English speakers on the Internet, which is about 600 million people. That means that if the Creative searches randomly, one would find a True Fan in every 60,000 people contacted. If you need to talk to 60,000 people to get $10, there just is no way to do it cost effectively. You are doomed before you start.
Of course, we don't really search randomly. We make an effort to find places that distill the general population down to a much greater concentration of True Fan candidates. Even if we do find a place with a hundred times greater concentration, we still need to sort through 600 people to find one True Fan. While finding such a place can be exhilarating, in the final analysis, few of our True Fans are actually hanging out in these kinds of locations. Consequently, we may add a few hundred by this method, but, after that, we have no additional marketing options.
We are, I know I have been, attracted to the notion of WOM. In theory, for those familiar with the concept of Six Degrees of Separation, you can reach every one of your True Fans, simply by asking for some help from those sympathetic readers.
The second problem is that, when it comes to True Fans, rarely is it love at first sight. Most often, one becomes a True Fan through multiple exposures over time. This actually suggests that the middle pricing model, Technium's 1,000@$100 may be the most difficult price point to make work. What I mean by that, is that it is probably far easier to woo a few, say 100@$1,000, if the product output is amenable or to find a large number of candidates, say 10,000@$10, who aren't in love yet, but are willing to part with a little money to continue the process.
The upshot of these two factors is that, in the absence of a more effective aggregators, success will remain elusive. So, the first order of business is to stop quixotically charging off as a lone wolf, attempting to find your 1,000 or 10,000 or 100 True Fans and start working together with other Creatives who are searching for a similar audience or market. This is one of the ideas behind the Enterprise Network. In many cases, traffic is its most important asset.
Saturday, December 17, 2011
Enterprise Networks and Crowdfunding Legislation
On November 10, 2011, the House passed Entrepreneur Access to Capital Act, H.R. 2930 by a 407-17 margin. The legislation will allow companies to offer up to $2.0 million of equity with a limitation on individual investment of $10,000 or 10% of the investor's annual income, whichever is less. This will allow issuing companies to bypass the difficult and costly registration process. If enacted, it will completely enable Enterprise Networks and, as such, should be considered to be very major legislation. It is also far more than what I have advocated in the way of revisions to the Regulation D exemptions.
Not only will this legislation or anything similar coming out of conference committee enable Enterprise Networks, it will bring their 70%+ annual returns on investment well within the prudent reach of nearly all participants. Simultaneously, it will bring powerful new funding tools, as it is intended, to the start-up entrepreneur. However, and this is critical, the enabling legislation alone will not be a panacea for the underfunded start-up. In this case 1,000 true fans will, rather than buying content, products or services, will invest $2,000 in the fledgling enterprise. All the problems with finding the 1,000 true fans will still exist.
This is why Enterprise Networks are so critical to Information Age success. With the InfoAge Enterprise Networks we will make a broad sweep catching all people of intelligence, drive and vision who are interested in participating in the emergence of the Information Age civilization. We can then organize them so that each market, each technology, each nascent culture can easily find the participants they need to succeed.
This is a very powerful idea that has very powerful potential. For those who want to become involved, the first step is to subscribe to The Future 101. A superficial understanding of the Transformation is not sufficient. A deeper understanding will give you, the subscriber, the prohibitive competitive advantage you will need to achieve early entrance into the Knowledge Class. At some point you will then join an Enterprise Network, either through our InfoAge Enterprise Networks organization or through some other mechanism.
A much more complete treatment of Enterprise Networks and the potential of 'Crowdfunding' is available to The Future 101 subscribers.
Not only will this legislation or anything similar coming out of conference committee enable Enterprise Networks, it will bring their 70%+ annual returns on investment well within the prudent reach of nearly all participants. Simultaneously, it will bring powerful new funding tools, as it is intended, to the start-up entrepreneur. However, and this is critical, the enabling legislation alone will not be a panacea for the underfunded start-up. In this case 1,000 true fans will, rather than buying content, products or services, will invest $2,000 in the fledgling enterprise. All the problems with finding the 1,000 true fans will still exist.
This is why Enterprise Networks are so critical to Information Age success. With the InfoAge Enterprise Networks we will make a broad sweep catching all people of intelligence, drive and vision who are interested in participating in the emergence of the Information Age civilization. We can then organize them so that each market, each technology, each nascent culture can easily find the participants they need to succeed.
This is a very powerful idea that has very powerful potential. For those who want to become involved, the first step is to subscribe to The Future 101. A superficial understanding of the Transformation is not sufficient. A deeper understanding will give you, the subscriber, the prohibitive competitive advantage you will need to achieve early entrance into the Knowledge Class. At some point you will then join an Enterprise Network, either through our InfoAge Enterprise Networks organization or through some other mechanism.
A much more complete treatment of Enterprise Networks and the potential of 'Crowdfunding' is available to The Future 101 subscribers.
Friday, December 16, 2011
The Live Anywhere Option: Boutique Villages
In the late 1990's I became fascinated with the Cultural Calculus that I had developed and the resultant expectation of the emergence of numerous intertwined global cultures. At the time I imagined, quite correctly, that a kind of 'cultural quantum' would be necessary. Christopher Alexander, et al. in 'A Pattern Language' argued that the quantum would be 'The Village of 7,000'.
This was based almost entirely upon considerations of political and civic interaction. When I began to consider other aspects, economically viable catch basins, community infrastructure, etc. I concluded that the quantum, if it was to be a true manifestation of a global culture, would likely need to be at least 20,000 and often as high as 60,000 in population.
This also happens to be the general community size preference for most Americans. They want their smaller community to be within easy reach of a large metropolitan area. However, these same expectations can be met through an aggregation of 'boutique villages.' In other words, a properly constructed web of boutique villages with a total population of a million or more and with proper traffic flows can function like a large metropolitan area while preserving the small town feel for all of its residents.
I have expected that two separate tracks will lead to boutique villages and the global intertwined cultures. The first has been moving slowly, but steadily. This is the growing tendency within developed nations for communities that are more culturally homogenous than the nation as a whole to establish local laws that fly in the face of the national laws. Examples are 'sanctuary cities' that refuse to enforce national immigration laws and cities that 'de facto' disallow abortions. On the other side we have localities that enforce immigration laws when the Federal government demands that they do not.
This is a kind of 'slow and steady' march toward the separation of cultural and geographic sovereignty. It is cultivating the soil for the more overt, intentional community that provides an enabling environment for a particular cultural perspective. I was rather hoping that we would build the first of these for Polymathicans. However, it appears Future Cities Development, Inc. may build the first such city in Honduras. The people behind FCD are the same people who have been trying to build a sea based Libertarian city. So, while cultural identity is not overtly expressed on their website, there does appear to be an underlying current of one.
In the end this will be a fascinating 'proof of concept' on boutique villages and, most likely, far from its ultimate expression. Within Polymathica and The InfoAge Enterprise Networks, our Polymathican Villages still have the best chance to be the first to express the concept fully. Polymathica is at odds with the ambient cultures. It celebrates erudition over specialization. It is dedicated to the expression of refinement in a crass and vulgar world. It is intellectual in an almost anti-intellectual contemporary milieu. While a product of the Western civilization, it is clearly distinct from any other current manifestation.
It is also, despite the difficulty I have experienced corralling Polymathicans, a population that will likely enter the Information Age Knowledge Class well ahead of the rest of society. They will express the paradigm of a Culture of Affluence and will, by virtue of Knowledge Class membership, be among the first to enjoy the 'Live Anywhere Option.' We are prime candidates to supplant Future Cities Development, Inc. as the leading force of Information Age community development.
If you are interested in pursuing this as an investor or as a participant, you should first subscribe to The Future 101. It is not possible to understand boutique villages without understanding the The Transformation in its entirety. Next, you should join the InfoAge Enterprise Networks. Once a member, you should join Polymathica Enterprises and from there you will join Polymathica Village Development. Parenthetically, I am also searching for founders of the InfoAge Enterprise Networks, which could provide you with your 'live anywhere Knowledge Class career.'
This is a very large undertaking that eventually will create hundreds of thousands of Knowledge Class career opportunities. While it will create many wealthy people, of far greater importance to most of us, we will also have created a sense of place and a cultural identity for Polymaths. This weekend I will discuss this in much greater detail within The Future 101. I hope to see you there.
Regards,
Michael Ferguson
This was based almost entirely upon considerations of political and civic interaction. When I began to consider other aspects, economically viable catch basins, community infrastructure, etc. I concluded that the quantum, if it was to be a true manifestation of a global culture, would likely need to be at least 20,000 and often as high as 60,000 in population.
This also happens to be the general community size preference for most Americans. They want their smaller community to be within easy reach of a large metropolitan area. However, these same expectations can be met through an aggregation of 'boutique villages.' In other words, a properly constructed web of boutique villages with a total population of a million or more and with proper traffic flows can function like a large metropolitan area while preserving the small town feel for all of its residents.
I have expected that two separate tracks will lead to boutique villages and the global intertwined cultures. The first has been moving slowly, but steadily. This is the growing tendency within developed nations for communities that are more culturally homogenous than the nation as a whole to establish local laws that fly in the face of the national laws. Examples are 'sanctuary cities' that refuse to enforce national immigration laws and cities that 'de facto' disallow abortions. On the other side we have localities that enforce immigration laws when the Federal government demands that they do not.
This is a kind of 'slow and steady' march toward the separation of cultural and geographic sovereignty. It is cultivating the soil for the more overt, intentional community that provides an enabling environment for a particular cultural perspective. I was rather hoping that we would build the first of these for Polymathicans. However, it appears Future Cities Development, Inc. may build the first such city in Honduras. The people behind FCD are the same people who have been trying to build a sea based Libertarian city. So, while cultural identity is not overtly expressed on their website, there does appear to be an underlying current of one.
In the end this will be a fascinating 'proof of concept' on boutique villages and, most likely, far from its ultimate expression. Within Polymathica and The InfoAge Enterprise Networks, our Polymathican Villages still have the best chance to be the first to express the concept fully. Polymathica is at odds with the ambient cultures. It celebrates erudition over specialization. It is dedicated to the expression of refinement in a crass and vulgar world. It is intellectual in an almost anti-intellectual contemporary milieu. While a product of the Western civilization, it is clearly distinct from any other current manifestation.
It is also, despite the difficulty I have experienced corralling Polymathicans, a population that will likely enter the Information Age Knowledge Class well ahead of the rest of society. They will express the paradigm of a Culture of Affluence and will, by virtue of Knowledge Class membership, be among the first to enjoy the 'Live Anywhere Option.' We are prime candidates to supplant Future Cities Development, Inc. as the leading force of Information Age community development.
If you are interested in pursuing this as an investor or as a participant, you should first subscribe to The Future 101. It is not possible to understand boutique villages without understanding the The Transformation in its entirety. Next, you should join the InfoAge Enterprise Networks. Once a member, you should join Polymathica Enterprises and from there you will join Polymathica Village Development. Parenthetically, I am also searching for founders of the InfoAge Enterprise Networks, which could provide you with your 'live anywhere Knowledge Class career.'
This is a very large undertaking that eventually will create hundreds of thousands of Knowledge Class career opportunities. While it will create many wealthy people, of far greater importance to most of us, we will also have created a sense of place and a cultural identity for Polymaths. This weekend I will discuss this in much greater detail within The Future 101. I hope to see you there.
Regards,
Michael Ferguson
Friday, November 25, 2011
1,000 True Fans and the Enterprise Network
Creatives come in all sorts of stripes. There are composers, authors, painters, sculptors, fashion designers, architects, inventors, pundits, floral arrangers, interior decorators, television producers, to name a few. In fact, in the article, "What will you be doing in the Information Age?" the first two categories I discuss are Designer and Content Creator, both 'Creatives'. They may comprise as much as 15% of the workforce.
Whether producing video content or costume jewelry, all Creatives, from aspiring to successful, have one thing in common; they must find sufficient fans to pay the bills. The sad fact is that, today, few of them are succeeding. Most are putting forth enormous effort, frequently with little or no tangible financial results. In some cases, such as the ad supported blog, the business model, itself, is broken beyond repair. As we discuss in The Future 101, it will most likely evolve into subscription, cooperative magazines.
In most cases, it actually boils down to the simple problem of traffic acquisition. In other words, assuming that you have demonstrated that there is a market for your wares, it then becomes a matter of finding that market for less cost than the resulting revenue generated. I know many blogs, for example, who having generated awareness in 10,000 people have followings of 100. Considering that it is just 1/6,000 of the English spearkers on the Internet, that means with full awareness, they may have over 500,000 readers. With proper monetization, that would create a fine, full time income. However, it is also a dream. There is no way for a single blog to gain universal awareness for less than the expected advertising revenue.
To this end, Technium discussed the idea of 1,000 True Fans. It suggests that the future may be characterized by countless creators who have found 1,000 enthusiasts who will provide them with $100 per year each in revenue. As its author, Kevin Kelly, argues, $100 X 1,000 = $100,000 less some expenses is a living for most people. It certainly is far more attractive that attempting to live on a blogger's income.
While true and on the surface 1,000 doesn't sound that difficult, in practice, it is proving just short of impossible. There are exceptions, of course, and Technium discusses Amanda Hocking, a dramatic example. She actually is earning six figures per month. Yes, per month. However, she is notable precisely because she is one of just a handful of examples of a success. Also, she has not found 1,000 True Fans. She has found hundreds of thousands, perhaps millions, of them. And, at $3 to $5 per e-book, they are more mildly interested rather than True Fans.
John Scalzi wrote a wonderful article entitled, "The Problem with 1,000 True Fans" that goes a long way in explaining why we have so few success stories. Key among these is a consideration of price elasticity. In other words, if my goal is to obtain $100,000 per year, I can, as Technium suggests, find 1,000 True Fans who support me with $100 per year. Or I could find 10,000 at $10. Or, on the other hand, 100 at $1,000. The Creative is faced with a dilemma. The market research required to determine where on the elasticity curve the optimum profit may be found is too expensive. Consequently, the Creative must guess and they usually guess wrong. Furthermore, for most Creatives, even if they guess correctly, it still won't be easy.
I emphasize again that this is important because Creatives will likely constitute the largest career category in the Information Age. Many of my readers who, presently, don't think they are likely to be one of them are going to turn out to be wrong. The imagination you are demonstrating by reading The Future 101 suggests that over time and over the Transformation, you will discover that it is your new career. It is for me, despite spending nearly my whole career in Finance. The Transformation will be forcing many career changes. So, stay open. Sometimes reality forces you in a direction that you should have gone anyway.
However, in order for this to be an option, it needs to be viable and, currently, save for the few notable exceptions, it is not. I have been personally going through this. Some of my readers have been as well. We all have discovered that there are two primary problems.
Suppose a Creative has a business model that requires finding 10,000@$10. Again, assume that the market is English speakers on the Internet, which is about 600 million people. That means that if the Creative searches randomly, one would find a True Fan in every 60,000 people contacted. If you need to talk to 60,000 people to get $10, there just is no way to do it cost effectively. You are doomed before you start.
The second problem is that, when it comes to True Fans, rarely is it love at first sight. Most often one becomes a True Fan through multiple exposures over time. This actually suggests that the middle pricing model, Technium's 1,000@$100, may be the most difficult price point to make work. It is not enough to warrant the effort of creating a True Fan and it is too much for the casually interested. It is probably far easier to woo a few, say 100@$1,000, if the work product is amenable or to find a large number of candidates, say 10,000@$10, who aren't in love yet, but are willing to part with a little money to continue the process.
The most effective approach may be a low front end commitment, followed by a larger commitment from those who do become True Fans. This is my approach with a $54.95 annual subscription, but for those who understand the Transformation and wish to pursue it aggressively, I will be providing several higher level opportunities.
The upshot of these two factors is that, in the absence of more effective aggregators, success will remain elusive. If however, traffic can be found in large amounts and at a low price, what is currently a dream can become a viable career option.
We are, I know I have been, attracted to the notion of word of mouth. In theory, for those familiar with the concept of Six Degrees of Separation, you can reach every one of your True Fans, simply by asking for some help from those sympathetic readers. In practice, when you are searching for a handful of people who will respond to you at the True Fan level, it doesn't work well.
Consider the total Internet population as comprised of three groups. The first group, very small, and likely widely dispersed, are your True Fans. They may be one out of a thousand among the general population and one out of a hundred where you are searching. Perhaps one in twenty within that search universe are sympathetic, but not True Fans. All other, essentially 95% of the search universe is of no benefit to you.
Your call for word of mouth, then, may be heeded by 5% of your contacts. However, it is usually heeded by 'sharing' on facebook or retweeting, etc. These methods rarely meet the requirement for virality. In other words, if 100 shares leads to less than 100 more shares, the word of mouth is decreasing and will fade out. If, however, 100 shares leads to more than 100 more shares, the word of mouth will grow. That is much more rare than one might think. In fact, most people discover that word of mouth provides marginal benefit and even this requires constant pump priming.
In an Enterprise network, let's assume in this case, for Internet magazines/blogs, the trick will be to aggregate several sites with very similar demographic appeal and then attack that niche aggressively. If you approach 100 potential readers, you may get one True Fan. If we approach 100 potential readers, we may get five True Fans between us. The process is five times more efficient.
However, few people are just blog readers. They often have many similar consumption patterns. Perhaps they have a high density of interest in custom designed and hand made jewelry. Maybe they enjoy educational vacations. So, we can also aggregate with a number of such products and services and because each brings people into the Enterprise Network we are again increasing our personal exposure while doing the same for others.
This, then, is the logic behind one type of Enterprise Network. My version of this is Polymathica.com. In our case, our market are people of refinement and erudition. One might imagine a Thomas Jefferson or a John Stuart Mill, although, obviously, we will not all be of that degree of erudition. Polymathica.com then becomes a market saturation site. In other words, our goal is to make sure that if our market is interested, we have it. If your blog, product or service primarily serves this market, then your market will be here and you can talk to them and you can acquire your 1,000 True Fans in a cost efficient way.
Recently, I received a link to The Age of the Platform. Germane to this discussion are the matters of Amazon, Facebook and Google. Together, these platforms provide Products, Social Media and Search Services to, virtually, the whole world. They are differentiated by service. Polymathica.com and other demographic Enterprise Networks are defined by a market niche and then it will provide all platforms to that market, customized to fit the attitudes, lifestyles, habit and preferences for just them.
This is a very powerful idea that may come to dominate up to 30% of the total Internet marketplace. Those consumers who identify readily with the popular culture will most likely remain with the traditional services. However, over time, Gaians, Goths, Wiccans, Polyamorists, Singularitarians, Polymathicans, New Age and a host of others will find that a dedicated portal to their content, products, services, social media, etc. will be much more efficient and self-affirming.
As a Creative, with a properly constructed Platform for your market niche, you will likely discover that, rather than struggling to get your 1,000 True Fans, you will sail right past that, right into Information Age income levels. Actually, the notion of content appealing to only one in 60,000 is rather peculiar. Almost always, even for highly defined niches, the appeal will likely be at least one in a thousand or it will be nothing.
For example, I feel confident from the quality of the reception for The Future 101, that I will ultimately have, perhaps, 20,000 True Fans. That suggests annual revenue of about $1.0 million and a personal income, likely, in the range of $300K. I will not be the largest participant in Polymathica.com by a long shot.That might be considered rather average. So, rather than struggling to survive, you will have the opportunity to be an affluent and well respected member of a global community, in our case, Polymathica.
Efficient access to a customer rich Internet environment is just one of several advantages of an Enterprise Network. They also provide access to collaborators and investors. I discuss that in much greater detail in the article, 'An Information Enterprise Network'
Additionally, for those who want to undertake the role of Investor or Fund Manager in the Information Age, memberhsip in an appropriate Enterprise Network will provide you with a steady stream of investment opportunities in enterprises that you will consider worthy and properly focused.
I hope to see you at The Future 101. It is a very nominal cost, at about 15¢ per day. It won't solve these very large issues, but it is a very effective first step..
Regards,
Michael Ferguson
In most cases, it actually boils down to the simple problem of traffic acquisition. In other words, assuming that you have demonstrated that there is a market for your wares, it then becomes a matter of finding that market for less cost than the resulting revenue generated. I know many blogs, for example, who having generated awareness in 10,000 people have followings of 100. Considering that it is just 1/6,000 of the English spearkers on the Internet, that means with full awareness, they may have over 500,000 readers. With proper monetization, that would create a fine, full time income. However, it is also a dream. There is no way for a single blog to gain universal awareness for less than the expected advertising revenue.
To this end, Technium discussed the idea of 1,000 True Fans. It suggests that the future may be characterized by countless creators who have found 1,000 enthusiasts who will provide them with $100 per year each in revenue. As its author, Kevin Kelly, argues, $100 X 1,000 = $100,000 less some expenses is a living for most people. It certainly is far more attractive that attempting to live on a blogger's income.
While true and on the surface 1,000 doesn't sound that difficult, in practice, it is proving just short of impossible. There are exceptions, of course, and Technium discusses Amanda Hocking, a dramatic example. She actually is earning six figures per month. Yes, per month. However, she is notable precisely because she is one of just a handful of examples of a success. Also, she has not found 1,000 True Fans. She has found hundreds of thousands, perhaps millions, of them. And, at $3 to $5 per e-book, they are more mildly interested rather than True Fans.
John Scalzi wrote a wonderful article entitled, "The Problem with 1,000 True Fans" that goes a long way in explaining why we have so few success stories. Key among these is a consideration of price elasticity. In other words, if my goal is to obtain $100,000 per year, I can, as Technium suggests, find 1,000 True Fans who support me with $100 per year. Or I could find 10,000 at $10. Or, on the other hand, 100 at $1,000. The Creative is faced with a dilemma. The market research required to determine where on the elasticity curve the optimum profit may be found is too expensive. Consequently, the Creative must guess and they usually guess wrong. Furthermore, for most Creatives, even if they guess correctly, it still won't be easy.
I emphasize again that this is important because Creatives will likely constitute the largest career category in the Information Age. Many of my readers who, presently, don't think they are likely to be one of them are going to turn out to be wrong. The imagination you are demonstrating by reading The Future 101 suggests that over time and over the Transformation, you will discover that it is your new career. It is for me, despite spending nearly my whole career in Finance. The Transformation will be forcing many career changes. So, stay open. Sometimes reality forces you in a direction that you should have gone anyway.
However, in order for this to be an option, it needs to be viable and, currently, save for the few notable exceptions, it is not. I have been personally going through this. Some of my readers have been as well. We all have discovered that there are two primary problems.
Suppose a Creative has a business model that requires finding 10,000@$10. Again, assume that the market is English speakers on the Internet, which is about 600 million people. That means that if the Creative searches randomly, one would find a True Fan in every 60,000 people contacted. If you need to talk to 60,000 people to get $10, there just is no way to do it cost effectively. You are doomed before you start.
The second problem is that, when it comes to True Fans, rarely is it love at first sight. Most often one becomes a True Fan through multiple exposures over time. This actually suggests that the middle pricing model, Technium's 1,000@$100, may be the most difficult price point to make work. It is not enough to warrant the effort of creating a True Fan and it is too much for the casually interested. It is probably far easier to woo a few, say 100@$1,000, if the work product is amenable or to find a large number of candidates, say 10,000@$10, who aren't in love yet, but are willing to part with a little money to continue the process.
The most effective approach may be a low front end commitment, followed by a larger commitment from those who do become True Fans. This is my approach with a $54.95 annual subscription, but for those who understand the Transformation and wish to pursue it aggressively, I will be providing several higher level opportunities.
The upshot of these two factors is that, in the absence of more effective aggregators, success will remain elusive. If however, traffic can be found in large amounts and at a low price, what is currently a dream can become a viable career option.
We are, I know I have been, attracted to the notion of word of mouth. In theory, for those familiar with the concept of Six Degrees of Separation, you can reach every one of your True Fans, simply by asking for some help from those sympathetic readers. In practice, when you are searching for a handful of people who will respond to you at the True Fan level, it doesn't work well.
Consider the total Internet population as comprised of three groups. The first group, very small, and likely widely dispersed, are your True Fans. They may be one out of a thousand among the general population and one out of a hundred where you are searching. Perhaps one in twenty within that search universe are sympathetic, but not True Fans. All other, essentially 95% of the search universe is of no benefit to you.
Your call for word of mouth, then, may be heeded by 5% of your contacts. However, it is usually heeded by 'sharing' on facebook or retweeting, etc. These methods rarely meet the requirement for virality. In other words, if 100 shares leads to less than 100 more shares, the word of mouth is decreasing and will fade out. If, however, 100 shares leads to more than 100 more shares, the word of mouth will grow. That is much more rare than one might think. In fact, most people discover that word of mouth provides marginal benefit and even this requires constant pump priming.
In an Enterprise network, let's assume in this case, for Internet magazines/blogs, the trick will be to aggregate several sites with very similar demographic appeal and then attack that niche aggressively. If you approach 100 potential readers, you may get one True Fan. If we approach 100 potential readers, we may get five True Fans between us. The process is five times more efficient.
However, few people are just blog readers. They often have many similar consumption patterns. Perhaps they have a high density of interest in custom designed and hand made jewelry. Maybe they enjoy educational vacations. So, we can also aggregate with a number of such products and services and because each brings people into the Enterprise Network we are again increasing our personal exposure while doing the same for others.
This, then, is the logic behind one type of Enterprise Network. My version of this is Polymathica.com. In our case, our market are people of refinement and erudition. One might imagine a Thomas Jefferson or a John Stuart Mill, although, obviously, we will not all be of that degree of erudition. Polymathica.com then becomes a market saturation site. In other words, our goal is to make sure that if our market is interested, we have it. If your blog, product or service primarily serves this market, then your market will be here and you can talk to them and you can acquire your 1,000 True Fans in a cost efficient way.
Recently, I received a link to The Age of the Platform. Germane to this discussion are the matters of Amazon, Facebook and Google. Together, these platforms provide Products, Social Media and Search Services to, virtually, the whole world. They are differentiated by service. Polymathica.com and other demographic Enterprise Networks are defined by a market niche and then it will provide all platforms to that market, customized to fit the attitudes, lifestyles, habit and preferences for just them.
This is a very powerful idea that may come to dominate up to 30% of the total Internet marketplace. Those consumers who identify readily with the popular culture will most likely remain with the traditional services. However, over time, Gaians, Goths, Wiccans, Polyamorists, Singularitarians, Polymathicans, New Age and a host of others will find that a dedicated portal to their content, products, services, social media, etc. will be much more efficient and self-affirming.
As a Creative, with a properly constructed Platform for your market niche, you will likely discover that, rather than struggling to get your 1,000 True Fans, you will sail right past that, right into Information Age income levels. Actually, the notion of content appealing to only one in 60,000 is rather peculiar. Almost always, even for highly defined niches, the appeal will likely be at least one in a thousand or it will be nothing.
For example, I feel confident from the quality of the reception for The Future 101, that I will ultimately have, perhaps, 20,000 True Fans. That suggests annual revenue of about $1.0 million and a personal income, likely, in the range of $300K. I will not be the largest participant in Polymathica.com by a long shot.That might be considered rather average. So, rather than struggling to survive, you will have the opportunity to be an affluent and well respected member of a global community, in our case, Polymathica.
Efficient access to a customer rich Internet environment is just one of several advantages of an Enterprise Network. They also provide access to collaborators and investors. I discuss that in much greater detail in the article, 'An Information Enterprise Network'
Additionally, for those who want to undertake the role of Investor or Fund Manager in the Information Age, memberhsip in an appropriate Enterprise Network will provide you with a steady stream of investment opportunities in enterprises that you will consider worthy and properly focused.
Your To-Do List
Clearly, for many, working toward membership in an Enterprise Network is the single most effective way that they have to deal with the approaching 'train wreck' while simultaneously capitalizing upon the opportunities that the Transformation will provide. The nice thing about this is that you can feather out of your Industrial Age situation with, at the start, relatively minor commitments of financial and time expenditures. It is how I am designing it. So, you have a three step process:- Subscribe to The Future 101. It will provide you with your initial, important education on The Transformation and will begin the process of affiliating with the people you will need to know.
- Develop a Transformation Action Plan. In other words, you need to begin to formulate the proper answers for you.
- Join an Enterprise Network. I am creating a venue where you will be able to do this. It will be called, simply 'InfoAge Enterprise Networks'.
I hope to see you at The Future 101. It is a very nominal cost, at about 15¢ per day. It won't solve these very large issues, but it is a very effective first step..
Regards,
Michael Ferguson
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