Memo: The Economy of One

Standing in Harvard Hall of New York’s eponymous Club years ago, I was privileged to overhear a conversation among Vernon Davis, Arian Foster, and John Elway. Together, the Hall of Famer and two NFL greats were promoting a new venture called Fantex, which, months later, would be written up by the New York Times.

Through Fantex, fans could buy stock in star athletes they supported, granting them rights to their share of the athlete’s future earnings. As contract values increase, so do endorsement deals, and the stockholder would be paid a greater dividend in step with that growth. They could also sell their holdings in the secondary market to another potential shareholder and profit. The value proposition was said to be the first of its kind.

Not everyone was convinced. One older gentlemen in the room argued that the value proposition wasn’t, in fact, the first of its kind. He witnessed the internet’s role in the demise of Fantex’s predecessor, the Bowie bond. In 1997, famed musician David Bowie and banker David Pullman marketed and sold asset-backed securities that gave investors a 10-year stake in future royalties.

The securities, which were bought by US insurance giant Prudential Financial for $55m (£38m), committed Mr Bowie to repay his new creditors out of future income, and gave a fixed annual return of 7.9%. He struck a deal with record label EMI which allowed him to package up and sell bonds on royalties for 25 albums released between 1969 and 1990 – which included classics such as The Man Who Sold The World, Ziggy Stardust, and Heroes, according to the Financial Times. [1]

Timing was against the success of the Bowie bond. By 2001, Napster launched and would soon change music forever by commoditizing it and making it freely and readily available. Pirated music pummeled the music industry and the record sales required to mint royalties for music’s biggest acts. As Bowie bonds sold and rose in value, the market closed to many of the other musicians hoping to duplicate Bowie’s efforts. Then Bowie bonds tanked.

In 2004 rating agency Moody’s Investors Services downgraded Bowie bonds to only one level above “junk”, the lowest rating, after a downturn in the music industry. Mr Bowie had himself predicted the decline in traditional music sales, telling the New York Times in 2002 that music would become “like running water or electricity”. [1]

The gentleman finished his brandy, placed his glass on a wooden table and left with a parting shot to Fantex. If I remember correctly, he said, “I have seen this before. The market is not ready for this bullshit.”

Nearly 20 years after the Bowie bond, it appears to be ready. The Bowie bond walked so that Fantex could fly. Fantex flew so that today’s creator economy could take orbit.

The same internet that commoditized music is today its own commerce destination. Where Napster once diminished value, today’s internet is capable of taking a commodity as irrelevant as a .jpg file and turning it into a multimillion dollar asset. We’ve witnessed a fundamental shift in how we monetize the value of digital creation. Through technologies like non-fungible tokens (NFTs), new wealth is being minted through the sale of digital art and properties. In the process, it is making creators the revenue that they’ve long desired. But there’s a much bigger picture to understand.

Consider 2PM’s Law of Linear Commerce: “the lines of demarcation between media and commerce are fading. For the brands that are most suited to the modern retail economy: media and commerce operations work to optimize for audience and sales conversion. This is the efficient path for sustained growth, retention, and profitability” [2PM, 2]

Linear commerce is now a business model for everyday individuals. The digital economy that once rewarded media companies or professional creators with eCommerce opportunities has made its way to the individual by allowing them to market themselves as growth opportunities.

The Economy of One

In a recent report by New York Times technology reporter Taylor Lorenz, she highlights a third wave of the shareholder creator economy pioneered by David Bowie and then Fantex, this time with a unique spin. Consider NewNew, a creator platform that allows users to sell moments in their own lives to fans. Lorenz writes:

Courtne Smith, the founder and chief executive of NewNew, said the company was “similar to the stock market” in that “you can buy shares, which are essentially votes, to be able to control a certain level of a person’s life.” “We’re building an economy of attention where you purchase moments in other people’s lives, and we take it a step further by allowing and enabling people to control those moments,” she said.

While NewNew received most of the attention, Rally.io is the closest analog to the shareholder system that Bowie once pioneered. Lorenz highlights Bomani X, a Clubhouse icon who recently launched his own coin with the hope of monetizing his trajectory as a creator.

With 25,000 followers on Twitter, you would expect that the digital strategist and musician would not have the audience to live solely as an “Economy of One” creator. The difference is that today, the velocity of creator development has never been faster. Bomani X boasts 3.4 million listeners on Clubhouse. And with creation comes the constant need for activity and access that Courtne Smith of NewNew seems to be working towards remedying.

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I’m off @joinClubhouse for a bit

The Rally coin allows you to buy futures in the individual much like a bet on the value of an NFT presents the opportunity for the art or its creator to grow in esteem, increasing the value of the NFT itself. For Bomani X, his temporary departure from Clubhouse led to a succession of sell orders on Rally, a short-sighted action but an indicator that even a creator’s 100 fans can be fickle.

The Incredible Kat Cole

When I stood in Harvard Hall, I listened to a stodgy older gentleman explain why the individualization of the stock market would never appeal to retail investors.  Perhaps the best example of why he was wrong lies in the well-earned trajectory of former retail executive Kat Cole’s transition from COO and President of FOCUS brands to coveted speaker, board member, and creator.

Cole has accumulated 1.2 million listeners on Clubhouse and became a cultural icon in her own right. You can find Cole on a Clubhouse stage with R&B singers, rappers, startup icons, mentors, investors, and even spiritual leaders. She seems to be the one person that has found a way to belong wherever she speaks. As a result, the New York Times recently published a report on the creator house she helped found, Audio Collective.

Audio Collective’s founding members produce all kinds of content. Mir Harris produced a performance of the Disney musical “The Lion King” on Clubhouse. Leiti Hsu runs a popular dinner party variety show. Kat Cole, a former business executive, hosts rooms focused on leadership. [3]

Her recent departure from Focus Brands allowed her to contribute more of her time to the genuine and caring mentorship that has become her trademark. With a platform opportunity, Cole was able to maximize her abilities in ways she couldn’t on Twitter, YouTube, or Facebook. This is what shareholders are betting on as platforms arise and monetization opportunities continue to evolve.

Cole is exactly the type of creator that our new culture seems to be looking for – one that sort of comes out of nowhere. It’s often the banter found on Twitter or in private forums where you would hear mentees, friends, and colleagues suggest:

If I could buy stock in anyone, it would be Kat Cole.

Bowie bonds and Fantex were before their time. Thanks to newly popularized technologies like NFTs and platforms like Rally and NewNew, consumers technically could buy stock in Kat Cole. The commerce and decentralized finance technologies of today have enabled us to monetize our belief in the potential of others. Though, knowing Kat, it’s unlikely that she’d profit off her potential as a creative icon or media personality. Her generosity is what’s helped her transition from inspiring retail executive to a solo creator and professional mentor known beyond the confines of retail or business.

It’ll be her sincerity and generosity that sends her rocketing beyond where she is today. She’s become an economy of one by positively impacting many.

Веб Смит | Редактор: Хилари Милнс | Арт: Алекс Реми 

Memo: The Future of Commerce (Infrastructure)

The future tends to resemble the past. Railroads, bridges, and highways democratized the American economy; eCommerce infrastructure will do the same.

When considering the impact of eCommerce, look beyond the brands, marketplaces, blanding, and pixels. Instead, see railroad planks and westward tent towns as far as the eye can see. Commerce is what happens when infrastructure meets opportunity.

Between 1871 and 1900, over 170,000 miles of railroad tracks were laid, fortifying the five transcontinental railroads, the first of which was completed in 1860. By 1900, the other four had been developed, connecting the Pacific coast to the eastern states. Along the way, centers of commerce developed around railroad hubs.

Chicago built its first rail connection in 1848 to connect the Windy City with the lead mines of Galena, Illinois. Later lines connected the city with Detroit, Cleveland, Cincinnati, New Orleans, St. Louis, Kansas City, Omaha, and St. Paul. The sudden rise of rail-based commercial transportation corresponded with Chicago’s post-Great Fire building boom. [2]

For the majority of North America, the online retail industry of today is analogous to the infrastructure of old: It has the potential to change one’s surroundings. The development of eCommerce capabilities will influence much of the rest of our lives, including how we live, how we buy, what we eat, where we work, how get there, and where we shop.

Chicago became the center of commerce in the West as constructed railroads, bridges, and automobile travel formed new patterns of agglomeration and consumerism. The infrastructure of its day captured new opportunity where there was none. Today, eCommerce is the infrastructure that will quietly influence industries from real estate to telemedicine.

We must begin viewing investments into our eCommerce infrastructure no differently than our predecessors viewed their investments into roads, bridges, and tunnels. The rest of the digital and physical economies will depend on that infrastructure: databases, financial technology, warehousing, logistics, privacy systems, and trust. Each are hallmarks of the eCommerce industry, but rarely do we consider how they can impact industries that have long been without these norms.

Democratization: The true benefit of eCommerce

In one day, I experienced three interactions that will be influenced by eCommerce infrastructure in much the same way that quiet towns grew to booming cities after the arrival of railroads.

The disappearing sleazy salesperson. By 9 a.m., I was at a car dealership for an oil change. The conversation of a new car purchase arose. And when the dealership felt that I was a serious buyer, a contract appeared on a table. The trade-in price was determined by a person who was incentivized to minimize the value of my vehicle. Knowing this, I made a call to another dealership who then offered 7% more for the same exact vehicle. The existing dealership agreed to the true value of the trade-in, but only after it was revealed that they undercutted my price to boost their own profits.

Tesla and Carvana are among those fixing a retail institution that’s built on an extraordinary lack of trust. Traditional dealers are not far behind. A recent report on a major English automobile dealership franchise proves as much.

Recent research conducted by automotive industry IT services and consultancy NTT Data found that one in six people are looking to only use online platforms for future car purchases. Its findings represent a 500% increase on those that have previously bought a car entirely online. [5]

The disappearing housing bias. End-to-end eCommerce may promote the democratization of where and how we live. Moments after opting out of the purchase, I drove to a plot of land in a suburb of Columbus where my family is building a home. The concept of “sanitized urbanization” was inspired by this area and covered in an August 2020 edition of 2PM:

Polycentric development is a pattern of transport connectivity, urban planning, mixed-use development, and progressive design concepts. The result of these accelerations, interruptions, and inventions is a new classification of suburban development that will become more commonplace as younger earners continue to flee cities. In kinder terms, sanitized urbanization takes the best parts of urban renewal and imports them to upper-middle class and wealthy exurbs. Dublin, Ohio’s Bridge Park is a great example of a polycentric development, featuring a member club, modern hotels, and top restaurants. [2PM, 2]

I sat in my car as I read a report from our local business press on the housing market in the area:

Several residents submitted comments that said they worried about increased traffic a “change in demographic” that renters would bring in a neighborhood that is largely owner-occupied. [3]

I am that change in demographic. The homebuilding process and its politics have not been easy over the past year. In The Opendoor Policy, I explained: “The path to middle-class home ownership is rife with unspoken obstacles and time-hardened customs. For immigrants and minorities, the obstacles can be even higher.” [2PM, 4] I wonder what innovations the democratization of eCommerce can bring to the often-twisted forces of human subjectivity.

The disappearing obstacles to preventative care. Later that afternoon, I experienced a small medical emergency that I was able to identify early thanks to a combination of wearables and available bloodwork. As I rushed to a medical facility with a resting heart rate of 168 beats per minute, I prepared myself for the succession of questions from a nursing staff and the attending physician. Neither had access to data from companies like Levels, Whoop, or Base, a health tracking system that measures vital systems through in-home lab assessments. Without context, they searched for the problem rather than finding a solution to what had already been identified.

Integrated healthcare and preventative medicine may become the technological issue of this decade. The technologies, no longer just for overzealous weekend warriors, have moved into the mainstream for anyone who wants to better understand their own health in a cost-effective way. In response to thoughts on the need for these integrated technology and care, a medical doctor replied:

Access was greater when your contact point was in the same place as your doctor. “Press one to make an appointment. Press two for billing…”

In each case, eCommerce can systematically democratize key functions of our lives by removing the gatekeepers. Much like railroads provided access and commerce, new technologies can simplify the purchase of a car, remove bias from the purchase of a home, or provide peace of mind without dialing a number to make an appointment with your physician.

While brands, marketplaces, and concepts like Stitch Fix, Allbirds, Amazon, DTC, HENRY, and Shopify define eCommerce today, they won’t forever. The merits of eCommerce will be at its fullest potential when digital transactions become enjoyable, objective, and universally available. When you think of eCommerce, consider roads, railways, and bridges. And then remember how those tools connected an expansive, underdeveloped nation to opportunity and greater freedoms.

Веб Смит | Редактор: Хилари Милнс | Около 2PM

An Open Letter: On Community

 

Community building isn’t easy. This weekend, everything went wrong.

It started with a weird bug that was causing us a few problems. Here and there, a paying customer would write to ask “Why am I receiving a rejection email?”, or something similar. We would explain it away and change a setting to prevent it, but it kept happening. And then on Saturday at 3:15 a.m. EST, a deluge of angry, confused or sad emails bombarded my inbox.

Behind the scenes, the 2PM Inc. organization is seven people large. I am the only full-time worker, like Sahil Lavingia’s lean strategy at Gumroad. That’s not to slight our team, however: four contractors and two paid interns are incentivized and capable of doing great things with the time that they share with the company. The 2PM team is so talented and consistently productive that the company would have to be venture-backed to afford each of them. I am working to get to the point where cash flows can support them. They are the best at what they do. We scrappily do the work of many, three days per week. If memberships are low for one week, I can at times feel like I disappointed them. This weekend, I disappointed far more than my team.

Why am I being rejected from something that I didn’t apply to?

In that moment, your entire business rests in the balance. Dozens upon dozens of loyal members opted out of auto-renew, angry at the insult. One email reply was: “You’re dead to me.” Another member wrote: “A real polymath would be smart enough to turn off automated emails before deciding who they want in their stupid little club.” He would later reply: 

I should have given you the benefit of the doubt and instead I sent a mean email. Thanks for clarifying. I enjoy your work so I was extra sensitive.

They were not mad because they were interested in joining 2PM’s growing community but because the email itself was incredibly callous. The subject line read: “You’ve been rejected from Polymathic.” And in the body of the email: “A staff member rejected your account.” Neither were true. Our community software sent that email from its servers with our branding but without any of the following: our permission, copywriting, or basic understanding of how 2PM’s community works.

Discourse, an open source community software, sent thousands of emails that we didn’t author after an admitted API bug between their backend and Memberful’s membership and paywall software. I emailed their support but the office is closed on weekends. By that morning, I had to send an email addressing the issue. It would be the first time that I’d ever send an email of that sort. I moved as quickly as I could, hoping that the vast majority of those offended would see it.

Без названия

The one and only ⁦@web⁩ wrote this for your swipe files. Put it under “how to apologize when something beyond your control goes wrong”. We’ve all been (or will be) there. Well done, Web. pic.twitter.com/z97dH3zu2p

Meanwhile, communication between 2PM and Discourse’s teams moved slowly back and forth through email. I tried to communicate the severity of the situation; they tried to communicate how inconsequential the trigger that caused the fallout was. It would be 20+ hours of synchronous communication before this stalemate broke.

By this morning, Jeff Atwood, the Co-Founder of Discourse, chimed in, perhaps the first sign of affirmation that our hosting company recognized the severity:

We’ll be happy to send out individual apology emails to all affected users, taking FULL responsibility for that erroneous email – because that was absolutely our fault! I can offer to personally send them signed Stack Overflow stickers, if that helps (not sure if your audience uses / knows Stack Overflow, but I was a co-founder). I will write these apology emails myself, and send them from my personal email account.

I chose to opt out of this email. For one, our members don’t need another email from Discourse – even if it does provide 2PM’s vindication. And unless they were willing to apologize for the copywriting and flaws that relinquish the control of their clients, I wasn’t interested in continuing the conversation.

What we’re building at Polymathic

Anyone who reads 2PM understands the value of deep generalism (or polymathy) as an educational pursuit. Each newsletter’s curations are broad and cross-disciplinary. The Polymathic community that we are building for members is the next step in this process. We encourage the sourcing of reports, data, and insights in economics to art history to the sciences or real estate. It is my belief that the study of broad subjects unlocks deeper knowledge of your own industry. I often share the obscure Henry Ford anecdote as an example:

Henry Ford’s great technological breakthrough didn’t come by way of his own Industry. He visited a Chicago meat packing plant, watched the disassembly process, and reverse engineered the idea for his factory’s manufacturing revolution.

It has been a slow build, sometimes just adding 4-7 people per month across a spectrum of professional and academic specialties. Each of these members share a desire to contribute and learn from the woman or man next to them. The goal is an ambitious one: Polymathic is to become a school of thought for thousands. One where any long-term Executive Member can one day join and contribute and learn. In short, there are no rejections. That simply defeats the damn point of everything that I’ve worked to build.

When you are bootstrapping a company like this, you make several trade offs. In an ideal scenario, I’d build my own community server instead of whitelisting another’s but for the stage that the company is in, the current stack makes sense. Our technology stack consists of a number of outsourced solutions: WordPress, Memberful, Mailchimp, Discourse to name a few. But you never expect those platforms to do you active harm. The act of Discourse sending that email cost 2PM nearly $70,000 in short term business. The persisting problem with Discourse’s API connection to Memberful (who’s been a wonderful partner) is currently hindering nearly $1 million in long-term revenue for our company with no promise that it will return. But the lessons learned are far more important than money lost.

Community building is not easy, even when your software is working for you. I have never valued the grace and perspective of the 2PM community more than I do today. What it taught me was the power of the benefit of the doubt. Many in the community were apologetic after receiving the email that clarified what happened. An even larger number of community members waited for justification before assuming the worst, assuring me that I had done enough good with 2PM to know that we’d never send an email like this. But the most critical takeaway is that nothing matters more than the collective that you build around your products. In one weekend, five years of hard work was threatened. It was the community that kept it together as technology failed them.

Веб Смит

Here is Discourse’s official apology.