Gradually I’ve had to accept a simple fact - I am not the norm. “Ordinary” people don’t sit around in the early morning, drinking organic earl-grey tea and thinking about the impossible things they’d like to accomplish, by pooling the funds of millions of strangers around the world. Or do they?I had a simple epiphany last week - what’s the largest example of social finance on the planet?(Hint: you’ll never guess.)

The stock market.

Oh, sure, no one thinks about it that way. But it’s true - millions of strangers, of disparate backgrounds and resources, pooling funds to drive forward the projects that they believe in. Now, their belief is a simple, one-sided thing: they believe the projects will make money. But that’s a good start, don’t you think?

What lessons could we draw upon from the history of the stock market, that might prove useful in moving forward the World’s first open “stake market”? According to wikipedia, trading was first institutionalized to manage the debts of agricultural communities, and then later extended to government debts as well. However, it was not until the Dutch East India Company issued the first corporate stocks and bonds in 1602, that the current form of the stock market was established, whereby common shareholders had interest in a share of the profits (or losses) of the business venture.

IANAH (I am not a historian), but this looks to me like a simple pattern of trust and reputation, extending from transactions with known and trusted locals, to the implicitly trusted “government” and then eventually to the anonymous “corporations”, lured by possibilities of greater returns.

Now here’s a subtlety that I may have been mistaken about when we first set out on this grand adventure - the Stock Market is driven by the sellers. In fact, the reality is that any newly launched security needs a “market maker” to create demand for it - literally, manufacturing interest. And so far, this has been proven out at BountyUp as well - our most active and successful early bounties have all been reverse bounties, started by those who intend to close them - in essence, driven by the sellers.

As much as this disappoints my philosophical desire to see buyers rise up and draw from the market, the goods that they truly want, I’m pragmatic enough to call a spade a spade. Expect to see more robust support for reverse bounties in the near future.

As part of our marketing efforts at BountyUp, I’ve been combing the net looking for ongoing discussions of Social Commerce, Crowdsourcing, Crowdfunding, etc. But it wasn’t until yesterday, when I rewrote the wikipedia article on the topic, that I finally accepted the fact that it’s just not happening yet. So I’m going to kick it off with my own (obviously subjective) ‘Ontology of Social Commerce’. But first, a random metaphor:

Imagine any market transaction, as a ride across a stony field, on the back of a donkey.

The donkey is the seller, and, as every buyer will tell you, he needs to be motivated. So we’ve got a carrot, on a stick. The carrot represents our buyer (or his motivation), and the distance across the field, the product itself.

Crowdfunding, is using more than one carrot.

Crowdsourcing, is taking your carrots and walking through a barn full of donkeys, waiting for a promising donkey to come forward.

And the Community (or Crowdcasting, if you like) is everything else in the story - how the donkeys got into the barn in the first place, whether the carrots are all the same size and shape, who gets the leftover carrots if there ARE any leftovers, etc. You get the picture. (more…)

BountyUp is essentially a tool that facilitates collaborative commerce. Traditionally we have had private goods, which have a subjective value to us and to which we can also ascribe some sort of monetary value. Examples of this would be: an ice cream cone, a car, a plane, or a building; all of which we can define a value for, and then determine if we want to buy it or not.

On the other side of the spectrum of goods have been the public goods, for which we also have a subjective value, but which are too large or nebulous for us to accurately attribute a monetary value. Examples of these would be: clean air, a legal system, space exploration and parks. All of these are goods that we want, but nothing to which, as individuals, we are able to ascribe a monetary value. Traditionally, again, we have paid taxes and elected people who, presumably, know where these funds should be directed in order to meet the needs of the general population.

BountyUp has created one of the first tools for a marketplace that addresses what I’d like to refer to as “a semi-public” (or semi-private) good. An organization such as NASA that can define the success metrics of any particular task (in the form of a Bounty) and put money on the table, allowing any other organization to add to the Bounty. If NASA, for example, starts a Bounty for setting up a station on the moon, then anybody could contribute towards that particular success metric (designing a particular type of rover, or engine, or camera) and individuals or institutions can contribute, knowing that if the Bounty is not completed by a particular deadline, everybody gets their money back.

Or say you want a park with a place for your children to play. You might want to put 50 bucks down for a park with certain dimensions and a swing set. Well, people with children in your city might also feel that they would like to, essentially buy a park for 50 dollars. Get 10,000 people together, and you have a half-million dollar Bounty. A real estate developer can buy a piece of property, plant some grass, put in a swing-set - and collect the Bounty. What if the city put in the park, and collected the Bounty? They could even put some money towards a Bounty for a mass-transit system, or a sewage treatment plant, or anything else - and the people that value that, can contribute towards that Bounty. Crowdfunding as a fully distributed, decentralized method of acquiring semi-public goods - that, themselves, are crowdsourced for delivery? Yes, governments of the world… you too can evolve.

PayPal. Google Checkout, Yahoo Stores, Authorize.net, 2Checkout, WorldPay… the list goes on and on. How do you make a smart choice?

Well, to start with, what are your goals? The smallest possible fees - as a percentage? The lowest possible out-of-pocket expense to get up and running? The most transparent experience for the user?

BountyUp started with PayPal, like many online projects do, for the simple reason that a PayPal gateway can be set up and running within a few short minutes. We’re graduating away from that, of course, but it looks like we’ll take a short hop to Google Checkout for the time being, and move the rest of the way to a “real” merchant account after the big launch. Stay tuned.

Recently we set out to raise a small round of angel financing for this crazy venture. Of course, we needed three things:

• A great idea, and a prototype (got that.)
• A great team (including a Board of Directors)
• A great ‘deck’

For those of you not yet familiar with Guy Kawasaki’s ideas on slideshows and pitching, check out the orginal blog post. I put together two versions of my presentation - one that’s fairly straight-laced and buttoned down. Dour, almost grim. And the other, using the “Colbert method” - keeping the spoken content in the “presenter’s notes”, but putting something funny in the main space. I’ve also been videotaping myself practicing the pitch - not only is this really easy to do with nothing but iMovie, but you can get amazingly valuable insights as well. (more…)

I’ve lead a couple of small financing rounds in my day, so I know more than I would like to about the various “exemptions from registration” that can be applied, either in Canada or in the US. And I’ve worked in and around the valley for long enough to have heard a variety of first-hand reports about how things can go with stock options - both the good, and the bad. An interesting story was the fact that both Red Hat and VALinux issued “friends and family” class stock options to members of the linux development community, prior to their IPOs. And it got me thinking…

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