What One Red Paperclip means

I spoke yesterday at the Engagement Alliance's conference on WhatMyspace Means about what a business model arising out of the primordial soup of the social network might look like.

First off, what are the characteristics of a network? A network is non-heirarchical, being composed of interconnected nodes. Which isn't to say all nodes are "equal," just that they're inter-connected, not sequentially connected.  A network is not a collective.  It's not about consensus, but about collaboration.  In a nutshell, a network is a self-sustaining system in which free-acting individual entities form complex, entirely voluntary interdependencies.

What I like about the network model is that there are virutally no barriers to entry. You can enter the network as a node at any time, for any reason.  Your performance determines whether or not you attract rewards in the form of attention, money, contacts, etc., but you need not pass muster with a "gate-keeper," i.e., an editor, banker, investor, in order to launch yourself. 

Failure in this environment brings few if any negative consequences, which gives incentive to those who wish to experiment, or to start enterprises with no obvious monetization model or exit strategy and feel their way along.  In other words, it's possible to launch an enterprise that makes sense even if it doesn't make money.  That is how Craig Newmark launched Craigslist--and let the profit model evolve organically along with the business model.

To illustrate how this works, I spoke a bit about One Red Paperclip, the phenomenally successful website started on a narrow but robust premise:  The site's author, Kyle MacDonald, originally proposed trading a red paperclip for a house.  He is an engaging, witty writer and a true showman, and within months had parlayed the paper clip into a snowmobile, a year's free rent, then an afternoon with Alice Cooper, garnering media appearances around the world along the way.  The site is clearly now a full-time job.

Now, clearly Kyle has "profited" from his highly productive endeavor, without a single dollar changing hands.  But is it a business? Is it a game? Is it art? Is it entertainment?  My point being that One Red Paperclip defies categorization because it is purely a phenomenon of the social network, and as such doesn't fit any category we would traditionally apply to any kind of going concern.

The One Red Paperclip website now hosts bartering forums, where others can trade, the first inklings of an avenue for conventional monetization (aside from the site's many ads). 

What is interesting to me is that the network sensed the genuine value of Kyle's intentions, perceived quality in his offering, and responded with both collaboration and attention, feeding and encouraging his growth in an entirely organic, symbiotic process.

From this I can extrapolate some very rudimentary emergent characteristics of the social-network-based endeavor: 

leadership without a heirarchy
collaborative, not collectivist
profitable, though not necessarily monetized

After the MySpace event, Adriana Cronin-Lukas and I were talking about how the very idea of a "business model" may be growing obsolete, and that we may need to re-learn how to conceive, plan and launch a business in a more intuitive, organic environment.  It sounds a bit too good to be true--the network as a business incubator that rewards authtenticity and creativity above all else?

What I like about this idea is that a web based "artist" like Kyle could start dozens of these kinds of "stunt" web sites, just for fun, with no opportunity cost whatsoever, in an environment where successes can be large or small, but always profitable because of the low opportunity costs.  The concept of risk is rendered virtually obsolete.  The reward comes from striking the right notes at the right time, and is entirely positive.

The moral to the story being: When you have nothing to lose, everything is gain.

Comments

[John Dodds]

Just came across news of this event of which I'm sorry I was unaware. Would like to have been there. I'm with you entirely about business models - it's a mean-nothing phrase that too many people ascribe to any aspect of a business or more likely a web 2.0 entity that is growing fast but has no revenues.

As for social networks, I don't believe the hype (especially when it comes to musical acts). I find your emergent characteristics to be far moreinteresting though I'm not sure if I agree re the lack of hierarchies. I have blogged frequently about this but think you might best see where I come from via this post written four days after yours yet in total ignorance.

Co-Operative Crowds Versus Narcissistic Networks.

The coining of the term crowdsourcing to define one of the best aspects of online communitarianism has made me think of crowds, not only in terms of wisdom, but as the antidote to social networking (which readers will know I view as over-hyped eye-ball collections). All this in spite of the slightly perjorative connotation that is often attached to crowds. Some thoughts on how they differ and how crowds are more likely to provide the benefits that so many people are ascribing to social networks.

Crowds are focussed self-moderating groupings.
Social Networks are self-selecting disparate webs.

Crowds are filled with real conversations and debate.
Social Networks are filled with shouting and self-promotion.

Crowds are altrusitically selfish (they want to give valued service).
Social Networks are inherently selfish (they want a voice).

Crowds can be monetised via permissive participation such as crowdsourcing and what I'd call crowdseeding.
Social Networks need interruptive marketing to be monetised.

Crowds generate energy and excitement.
Social Networks generate paranoia and neuroses.

Crowds embody the original concept of portal as marketplace.
Social Networks embody social climbing and status acquisition.

Crowds are something you want to be a part of.
Social Networks are something you feel you're expected to be a part of.

Don't be afraid of crowds.

[Robert Kay]

Crowds are good. But so are social networks -any paranoia is within, not intrinsic to the model. So also are teams, firms, groups, societies, clubs, and loose associations. The point is that they do different things, at different times, and serve different ends. It's not either - or, it's about being fit for purpose. Why create a false dichotomy where there is no need for one?

Dont be afraid of social networks. In fact, just dont be afraid of anything!

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