microstock market

ultimately what cyberspace does in many ways is decrease the "granularity" of economic transactions. you can imagine that an economic transaction has an overhead cost associatd with it needed to manage the bureacracy of the cash transfer. the army of people that have to support check passing, such as the mailman, bankers, etc., the people in the company that have to open envelopes and punch keys, etc. ad infinitum. these vast teams/roles of people are going to vaporize to move into other aspects of the economy. increasingly, the overhead of an economic transaction will move toward the infinitesmal. this radically changes many business models. consider the stock market for example. you have a situation where it doesn' t make sense for a company to be traded on the stock market except after some threshhold has been reached. I suspect this threshhold is due directly to economics that could radically change in the near future (say a decade). what I suspect this might mean is not merely new kinds of stock markets, but a massive plethora of new forums in which business can be transacted in cyberspace. I think we are going to see many new stock exchanges as the capital moves towards the ones that most efficiently handle it. and increasingly, I think you will see very small companies have stocks. you will also see a much better means by which an investor can judge the value of a company. the assets will be more open and thoroughly revealed on public web sites of the company. increasingly the outsider will be able to "peer into" a company for investment or business purposes. the companies with the most open policies are going to be those most favored by their customers. what would be neat is if one could invest in very small companies or ideas. I suspect our economy is moving in exactly this direction. also in addition to this, I suspect that regulations governing stock transactions are going to be challenged and increasingly melt away in the long run. the open market will find its own ways of guaranteeing the safety of its transactions that will make government interference only draining or damaging. so you can imagine that our economy of today is like moving around big boulders-- you need a lot of people and organization to create economic transactions. in the future, transactions are going to decrease in granularity and you will have a system more like the flow of electricity throughout an entire system. the revolutionary implications of cyberspace have barely begun to be uncovered. ultimately it will radically change the nature of our economics and government systems just as the introduction of the printing press did in its time.

At 05:15 PM 5/14/97 -0700, Vladimir Z. Nuri wrote:
ultimately what cyberspace does in many ways is decrease the "granularity" of economic transactions. ... increasingly, I think you will see very small companies have stocks. you will also see a much better means by which an investor can judge the value of a company. the assets will ... what would be neat is if one could invest in very small companies or ideas.
Really interesting post! I think the net will simplify the ownership issues and the publicity issues long before it makes good information about the value of small companies easy to get. That's far more dependent on the personalities of the players in a company (hard to judge, except in person), the ideas the company's trying to develop into products/services (may need non-disclosure arrangements, may need privacy to develop in, may not want to waste their time publicizing each step in their decision processes, contract negotiations are usually very private, etc.) On the other hand, the net can often help those parts of a business. The Cygnus Support folks have done well in a very open environment. I recently talked with a headhunter who'd seen my discussion with someone on Usenet and wanted an opinion about the guy; the headhunter was doing a lot of in-depth web searching to find people who might be interested or qualified for a position he was trying to fill. It's amazing what AltaVista knows about you, especially with DejaNews around... Venture capital firms provide some value to their investors by managing the granularity of the transactions, but they also add value by providing personal understanding of the companies they're evaluating whether to invest in. Information wants to be free, or is at least cheap to copy, but providing the personal attention needed to understand and analyze information and make good decisions on it is still expensive. The nets can improve the information they have available on both the company and the market, and can provide better information to investors about what venture capital analysts are good at evaluating what kinds of businesses. Will the nets split these businesses up into individual venture-advice-consultants competing for investors? Or will the lead to broader coordination between venture capital businesses? Or both? # Thanks; Bill # Bill Stewart, +1-415-442-2215 stewarts@ix.netcom.com # You can get PGP outside the US at ftp.ox.ac.uk/pub/crypto/pgp # (If this is a mailing list, please Cc: me on replies. Thanks.)

an interesting trend is occuring relative to the term "intellectual capital" that BS's message reminds me of. I've read recent issues of Forbes and "fast company" that talk about the concept of "intellectual capital", the former ridiculing it and the later glorifying it. what is intellectual capital? in short, in the information age, value becomes more and more abstract. you don't measure value any more in a company by the number of heads, like cattle, but in fact the volume of those heads. "intellectual capital"-- one person may be worth ten times another based on their contribution to the profitability of a company. increasingly we are going to see business models that reflect this truism, much to the dismay of "atom-based" companies that will fight this trend tooth and nail, and die out like dinosaurs kicking and screaming. we will see people make money that relates far more to their actual contribution to a company. if programmers are adding the most value, then their salaries will reflect it. in a way, their salaries already reflect it! part of my posting the "microstock market" is that I hope that this trend continues to the point that it may be possible some day to have a stock market of ideas-- a far more conceptual construction in which value is related to the people participating and their ideas, not the amount of atoms/mass that is involved. I suspect such a thing will eventually happen. I think in the future we will also see ways of growing companies from the very most seed-like idea to the mass manufacturing system. there will be some kind of cohesion and elegance about the whole thing, as the process is recognized as basic as growing plants. a neat book I would recommend to anyone is called "accidental empires" by an infoworld columnist on the computer industry that hints on some of these ideas. on to BS..
Really interesting post! I think the net will simplify the ownership issues and the publicity issues long before it makes good information about the value of small companies easy to get. That's far more dependent on the personalities of the players in a company (hard to judge, except in person), the ideas the company's trying to develop into products/services (may need non-disclosure arrangements,
intellectual capital. imagine everyone's resumes being posted on their web site. it may be hard to judge, but the information is there for you if you have some kind of measure. such systems already exist today for some companies. you see everyone's resume online. also, in companies in which people have individual web pages describing internal company projects, I suspect increasingly these pages will be open to the outside world so customers can better judge the value of a company. [ideas] may need privacy to
develop in, may not want to waste their time publicizing each step in their decision processes, contract negotiations are usually very private, etc.)
the question to ask is about "open standards" in the computer industry. ultimately I think this is a concept that will become far more global than merely electronics and software but begin to permeate the entire economic system. notice that it is possible for companies to survive, even thrive, on open standards. everyone benefits. it's not a "us vs. them" thing any more, a paradigm shift that requires some people to rethink their approaches and attitudes. (bill gates would be one example of this. he has found in the past that he made enemies out of companies that were not really his enemy. see the "accidental empire" book). however I do agree there is a role for secrecy even in this system. however openness/publicity will tend to be the new norm, instead of closed-up boxes as it is now.
On the other hand, the net can often help those parts of a business. The Cygnus Support folks have done well in a very open environment. I recently talked with a headhunter who'd seen my discussion with someone on Usenet and wanted an opinion about the guy; the headhunter was doing a lot of in-depth web searching to find people who might be interested or qualified for a position he was trying to fill.
yes, what I see in the computer industry is that increasingly because the intellectual capital is so valuable, you are going to see situations in which valuable players become like "free agents". they move around teams, they have people who do nothing but figure out where to plug them into, and their salaries are very high. this is happening right now in the computer industry. the concept of working at one company or another is increasingly less relevant. I've not seen many good books or articles on this amazing phenomenon, and hope that some people might be able to cite some.
Venture capital firms provide some value to their investors by managing the granularity of the transactions, but they also add value by providing personal understanding of the companies they're evaluating whether to invest in.
I agree. venture capital firms are on the leading edge of understanding the importance of "intellectual capital" and what it adds to a company. although I've heard horror stories of VC firms that just throw a lot of money around without the slightest clue about the technology involved. I suspect the converse is true that there are some very sophisticated technology-only VC firms that go over the technology they are funding with a fine-toothed comb. the image of VC is that it is very chaotic and hit or miss but I wonder if some VC firms are becoming far more scientific than throwing darts ... Information wants to be free,
or is at least cheap to copy, but providing the personal attention needed to understand and analyze information and make good decisions on it is still expensive.
intellectual capital is what transforms mere information into profit. there is a proportion going on here that might be exponential (profit is exponentially related to intellectual capital?) unfortunately while I believe IC exists, it is very hard to measure. it's like an intelligence test. everyone agrees that "intelligence exists", but no one has found a foolproof way to measure it. oh well, the market will support those who come the closest to the optimum. The nets can improve the
information they have available on both the company and the market, and can provide better information to investors about what venture capital analysts are good at evaluating what kinds of businesses.
tremendously. in fact I think our future economy is going to become extremely web-based. customers and companies will all use the web to interface with each other. companies without web pages will be considered extremely gauche.
Will the nets split these businesses up into individual venture-advice-consultants competing for investors? Or will the lead to broader coordination between venture capital businesses? Or both?
there is a neat idea in "accidental empires" that involves the idea of a software studio, which I think is a great idea. in short, the idea is to make software creation like moviemaking. you begin from the start in assuming that you may or may not have a hit. you hire contract workers who get a piece of the final action. the contract workers move onto new projects all the time. I think this could be a very powerful model, which is already being used in the production of computer games. p.s. thanks for taking me seriously BS <g>
participants (2)
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Bill Stewart
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Vladimir Z. Nuri