Difference between revisions of "RiskSharingPassiveReturn"

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==Brainstorming section==
 
==Brainstorming section==
  
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Here there needs to be a lot more brainstorming. The ''SEC needs to see potential sticks''. Scam artists are very good at evaluating the carrot versus the stick. If the latter is insignificant they will make the calculated step of risking the stick, for the big money.
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The stuff of moved to [[RiskSharingPassiveReturnBrainstorming]].
  
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===Possible stick===
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==Author credit==
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This page was created by [[MartinPfahler]]  and subtitled by [[User:Fridemar|fridemar]] 02:31, 5 August 2007 (PDT)
  
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I suspect that if this system were operational that all manner of internet communities would have interest in using it for fund raising. In such regard they do not want “bad apples” to spoil the system for every body else.
 
  
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Thus to create a “policing network”. Just as we have “bad guy” hackers that can make people’s lives miserable, the community has potential to gain a lot of “good guy” hackers to make the lives of the bad apples miserable. How miserable, and in what ways is open to discussion. At a minimum this police network should “out” the scammers to make others aware that they are not legitimate. This network also has potential to do “due diligence”, to insure that people are who the say they are.  
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==Discussion==
 +
 
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===[http://google.com/search?q=PeerInvest PeerInvest]===
  
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The “policing network” has potential for abuse. I don’t want to know if somebody making a posting is cheating on his wife, or is a rotten parent or boss – “the dirt” should be limited to whether or not this person has a relevant criminal record or similar activities, for example involving document forgery, embezzlement, fraud, and stealing. Even then there can be new bad apples that have no prior “bad history”, so the policing network should insure that “extreme” transparency is in place and functioning well. Lots of eyeballs “watching” can be a good preventive measure.
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'''Sam:''' Just wanted to leave some quick feedback that I think this is interesting. I also wonder if it is not already legally possible for people utilize for-profit cooperative or corporate structure to accomplish the same thing this article talks about, without having to beg the SEC for an exemption? This is similar to an idea I'd been rolling around in my head, and had posted here about a year ago: http://socialsynergyweb.net/cgi-bin/wiki/PeerInvest  --[[User:SamRose|SamRose]] 19:52, 7 August 2007 (PDT)
  
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===Pre-certification===
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===[http://google.com/search?q=FourTypesOfInvestingForCooperatives FourTypesOfInvestingForCooperatives]===
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''Martin'': Sam, thanks for your input! With some attorneys (experts in cooperative and SEC law) I currently brainstorm with, we are talking about '''three different types''' of potential people that could pitch their money into a virtual pot, and also be part of a for profit cooperative, so that any financial gains made by the cooperative could be divided amount the members:
 +
Enabling all three types, to pitch into a virtual pooling pot, can fill the pot faster, and likely with more money.
  
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The SEC could require pre-certification prior to making postings, where one must provide them with answers to questions, that we should be thinking about creating.
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====[http://google.com/search?q=Active+Investing+as+PeerInvest+in+an+OpenBusiness Active Investing as PeerInvest in an OpenBusiness]====
  
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Seek your ideas on how to make this work or more efficient [[MartinPfahler]]
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''Fridemar'': Welcome Sam for joining the conversation. I think, with your [[PeerInvest]]  [http://google.com/search?q=PeerInvest g] concept you open up a '''fourth source''' of [[RiskSharingReturns]] [http://google.com/search?q=RiskSharingReturns g] , we can name [[RiskSharingActiveReturns]] [http://google.com/search?q=RiskSharingActiveReturns g] in the context of our conversation. The peers take actively part in a (not necessarily non-profit) organisation, paying fees, making pledges or even donate for the service, so that they can expect revenue returns, in case their project succeeds. As an OpenBusiness all work and transactions of the organization are continuously monitored in public. Martin, could you discuss this with your attorneys too? As a convenience I am starting a WikiTrail, named PeerInvestTrail, so that we can comfortably traverse the material, connect it, comment it and automatically inviting new collaborators.
  
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===Call for passionate participants===
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[[WorkInProgress]] 
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I have ulterior motives for getting passionate members of the Wiki and open source communities involved with this topic.
 
  
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I am currently involved with meetings at some very large corporations, meaning communications with executives having Vice President status. Then nature of these discussions involves me trying to convince them to support in various ways, including funding, a mechanism that in effect has a virtual collection pot, to pay for execution of a novel project, and where I am pushing them to first throw some of their money into this pot, so that people within the populace see there is serious intent, not just talk – behind a project proposal.
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[[Image:Sheared PeerInvestWikiTrailStart.jpg|frame|thumb]]
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(thumb doesn't appear to work, please help)
  
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===Corporation Involvement===
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If you already have the TrailFireFoxPlugin installed, you can automatically see the annotation mash starting on this page, otherwise try [http://trailfire.com/fridemar/marks/134683 this link to the first annotation].
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Ideally the corporation would pitch in half the money, and then challenge Joe and Jane public to contribute the rest. The results of the project would have an upside for Joe or Jane, via something they can buy at a later stage, and ideally also to gain them passive income due to their sharing in the early stage risk, along with the corporation.  
 
  
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In this effort I also talk to cooperative and intellectual property and SEC attorneys, that are not currently part of the Wiki community, challenging them to figure out how to enable a general internet project posting, perhaps via a novel cooperative legal structure – that will be allowed by the SEC.  
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====InvestingForResults====
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''Martin'': a) type 1: This person (has no deep pockets and) contributes money because they want to use the results of a project themselves. For whatever reason they are motivated to contribute only with this upside.
  
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===Collaborative as new Partner for large Corporations===
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''Fridemar'': I inserted the parentheses, to include benevolent sponsors (philantropists).
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Today it is common place for large corporations to form business and development partnerships with large institutions like universities, the government, and other large corporations, and then to share in the risk as well as the later stage benefits. In contrast it is to be able to write collaborative legal contracts between a large corporation and some type of new cooperative, this latter entity being the new larger entity that will ideally become a more common place corporate partner.  
 
  
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===Collaborative as an Umbrella===
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====InvestingForResultsAndMoney====
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The point of the cooperative is to act as an umbrella so that the needs of the individual are better heard and met, by large corporations. This also has potential benefit to corporations, such as reducing their risk costs, their market research expenses, their logistics overhead, and their public relations overhead. Making these types of explanations in detail is what has gained the attention of some corporate executives, I proposing at least some type of test or pilot project to see how the new process will work.
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''Martin'': b) type 2: This person is just like type 1, with one important exception. They are not motivated enough to contribute their money, unless the project offers some type of passive investment stream (cannot guarantee it, but offers it).
  
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===Integrating Social Networking into the legal Framework===
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====InvestingForMoneyOnly====
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In my ongoing communications with attorneys it is clear, and they admit, that they have little or no understanding about new Internet trends, social networking, Wiki culture, consensus polling, on-line trust building, etc. – so are not in a good position to think up novel money pooling/risk sharing dynamics that might occur “on-line”. In such regard it is the on-line community that has potential to give novel process suggestions. Then we could feed these to the attorneys, to see how they might shake out, or be implemented so they are “legal” and avoid SEC problems.  
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c) type 3: This person is a deep pocketed accredited investor. This person seeks only passive return and does not intend to personally use the results of a project.
  
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Currently I do not have the better process suggestions from the on-line community, put hoping under this Wiki topic, to get some. [[MartinPfahler]]
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=====Soliciting InvestingForMoneyOnly needs Legal Prerequisites=====
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On the Internet one can already solicit the type 3 person legally. The gist of the process ''the target person must be'' an
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* '''Accredited Investor''': - which is a fancy word for saying
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one has high wealth, such as over a million dollars. They also use
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the term "sophisticated investor", here the implication is that they
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assume one of low wealth is more easily cheated by scam artists.  then
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* '''By Priviledged Access only''': i.e. by a process such as a
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secret password, by which this person can gain access to a project posting,
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where a passive return is being offered.
  
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----
 
  
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===RiskSharingActiveReturn===
 
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Martin, what do you think about the idea of [[OpenSharedDomainsPortfolioTrading]] within a [[OpenBusinessWiki]] with collaboration in form of [[LiterateTrading]] or more general [[LiterateMarketing]]. It appears to be in accordance with some of your sketched ideas in the article:
 
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[http://www.aboutus.org/RiskSharingPassiveReturn RiskSharingPassiveReturn]
 
  
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* transparency of the whole business process
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''Martin'': Fridemar, the term used by the SEC is "accredited investor" or "sophisticated investor"...
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* disclosed owner identity
 
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* disclosed financial status
 
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* efforts by public collaborations to develop domains
 
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* low cost involvement (of the Wiki-Entreprenuers, PennyBank.Biz)
 
  
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[[User:Fridemar|fridemar]] 17:08, 31 July 2007 (PDT) imbedding the OpenDomainsPortfolioTrading idea into the [http://SocialCommonWealth.Com SocialCommonWealth] blog.
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SEC definition of accredited investor:[[http://www.sec.gov/answers/accred.htm]]
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-----------------------
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Iv terms of a person note it states this person must be:
  
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===Meta-communication===
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# a natural person who has individual net worth, or joint net worth with the person�s spouse, that exceeds $1 million at the time of the purchase;
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Fridemar,
 
  
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Thanks a bunch for your edit improvements!
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# a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
 +
 +
Info about soliciting accredited investors via the Internet:
 +
[[http://www.icemiller.com/enewsletter/Bulletins/PEN/5Gen_Solicit_PEN.htm]]
  
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: Martin, there is so much content in your contributions, that my titeling only scratches the surface, emphasizing perhaps only a subset of your message. I feel nearly overwhelmed by the energy and information. On the other hand it prepares the refactoring of your contribution to a lot of pages. I thank you too, for the inspiring and highly motivating conversation. [[User:Fridemar|fridemar]] 16:40, 1 August 2007 (PDT)
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=====What are NoActionLetters ?=====
  
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From what I understand about the above (admittedly I still need to learn more), I find interesting.  
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''Martin'': The SEC web site has lots of related information, also see "no action" letters. These are letters produced by the SEC after they review a new process mode, that in effect says, "we promise not to sue you if you try this new mode of dealing with money" - which is what folks trying new "stuff" want to see before they invest lots of time and money. For more information see this section of the SEC web site [[http://www.sec.gov/answers/noaction.htm]]
  
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: The same with me. [[User:Fridemar|fridemar]] 16:40, 1 August 2007 (PDT)
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=====Soliciting InvestingForResults is Legal=====
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''Martin'': One can solicit the type 1 person with a project posting legally, because one is not offering this person money in exchange for their contribution, rather some type of other tangible resulting from execution of the project.
  
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=====Soliciting InvestingForResultsAndMoney is Illegal=====
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Today it is illegal to have a posting for the type 2 person, where one is offering the potential upside of passive revenue - it is against SEC regulations. This is where our attorneys are currently brainstorming to gain a novel legal mechanism or SEC exemption, etc. [[MartinPfahler]]
  
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===Problem of public solicitation of a passive investment deal===
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==Actual and potential Support for the project==
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''Martin:'' That said, in any of the above, if at any time there is mention to the public, about a process where one contributes their money, with the expectation of a passive return (for example the community’s wealth increases and then a share is returned to a contributor) this can raise legal problems with the SEC, because they typically view this as doing a public solicitation of a passive investment deal.
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''Sam'': Martin, have you had any response from the SEC so far? --[[User:SamRose|SamRose]] 08:31, 8 August 2007 (PDT)
  
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''Fridemar:'' Our conversation helps to clarify the difference between active and passive sharing.
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===Legal Experts already involved for a relevant Pilot Project===
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''Martin'': Sam, we are not yet that far. If a “non attorney” tries to get action out of the SEC the chances are it gains less serious attention than if presented by relevant legal experts. And such legal experts that we have involved, are not going to spend that time and effort unless they see some potential funding for a relevant pilot project.
  
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I agree Fridemar. In a case where cooperative group members contribute their money to in effect pay others to do something that none within the group can do, and where this activity then generates for the members a revenue stream, I would call this "passive sharing" I have interest in passive sharing dynamics because there are many activities where members of cooperative groups could gain revenue streams, even though they cannot do the direct work themselves. Example: Members of the cooperative have a conceptual idea for a novel raw material or mini-machine that would fit in their garage. In this case assume it takes PhD material scientists to actually do the R&D to invent this or that. Once it is produced, then each member buys the raw material or machine, then adds their labor to it, to create a local company offering novel customization services. People outside the cooperative (that did not contribute to the early stage risk) might also buy this "stuff", but if that happens patents can create a passive revenue stream for the cooperative members. In this case the members are initially passive, letting the scientist to their R&D, but at a later stage the members become active, when they actually put the resulting product to use, and apply their labor to it, to add value along a supply chain. This is an example of how on-line activity, can help people that do not spend much time on-line, and need better "off-line" work opportunities. And it just so happens that this reflect lots of folks in the populace.  Online folks tend to think people are not actively involved in the group, if they do not contribute on-line. In this example one can see that their initial on-line activity is rather passive, but later they become active in their off-line world - as a result of their minimal on-line activity. [[MartinPfahler]]
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===Potential support from Catherine Austin Fitts===
 +
''Sam'': Hmmm...I have to disagree. I believe that if inquiry methods were organized in the right way, it is plausible that enough legal experts would pool their knowledge and collaborate towards creating a framework that is legal, even without compensation, but for the greater good. One definitel legal expert who would likely be available to put time into this is Catherine Austin Fitts, among other people. She's already created some frameworks in the form of http://solari.com.
  
 +
''Fridemar'': Sam, for organic growth of this page and easier edit access to each conversational unit , I inserted section titles, inviting new participants to join our non-linear wiki-conversation. Let's find and motivate as much support as possible for the common benefit ...
  
 +
===Potential support from non legal Experts===
 +
''Sam'': Furthermore, I sincerely believe that it is possible and plausible that '''non legal experts''' shall be able to formulate, organize, and establish and fund the existince of for-profit micro-investing frameworks. In particular, I am personally interested in this existing framework: http://www.sec.gov/investor/pubs/invclub.htm  Because, I think that it can help people build up the trust among each other that is going to need to exist to be able to pool money and invest. As far as projects seeking funding goes, I think that it is pretty inexpensive to establish yourself as a private company, LLC, or other legal entity and sell shares, even in small amounts. This infrastrcture already exists, unless I am missing something that you are talking about here?--[[User:SamRose]] 12:07, 19 August 2007 (PDT)
  
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Therefore I created the term: [[RiskSharingActiveReturn]]. The community creates value, that has two parts:
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===Invitation to a novel Division of Dow Chemical===
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* the non-tangible value of publicized ideas, concepts, software, music, artwork, etc. round about a domain
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In such regard in mid September I have been invited by a novel division of the Dow Chemical Corporation (a division that is very interested in these issues), to further explain a pilot project proposal that involves this type of risk sharing, and that would enable people to interface with Dow under a novel for profit umbrella.
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* the market value of the domain, that can only be estimated, as long as it is not sold.
 
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The financial investment into a shared domain is less, than buying it all for oneself.
 
  
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The risk is reduced, when more active shareholders develop the value of the domain by collaboration.
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''Fridemar'': Such a project needs a lot of support to prosper. What kind of support is on the way?
  
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By "Domain" do you also mean tangible stuff that cannot be put through a digital pipe? [[MartinPfahler]]
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===Cooperative Attorney and hopefully by a Bigger Number of Wikizens===
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''Martin'': A cooperative attorney will also join me in this effort. After this, we will have a better read on Dow, and if positive, the involved legal experts will likely contact the SEC. At this stage, after meeting with Dow in Sept, I would sure like to have more than you, me, and Fridemar in this brainstorming discussion – rather I’d like to show Dow executives there is a Wiki space filled with hundreds or thousands of people with this topic interest (big corporations like Dow are not impressed when they see just three people off in the corner – they want to see bigger numbers of people).
  
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The risk is reduced even more, if the active shareholders don't put all their "eggs into one basket", i.e. if each one of them cultivates a portfolio of domains.
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''Fridemar'': To get a bigger number of Wikizens activated, it would be helpful to get some opinion leaders involved. Did you try something like this? (I wouldn't have asked you this, if this wasn't a wiki, where everyone can make a "vaticinium ex eventu", i.e. be a good prophet :-)
  
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===Transparency of the Whole Business Process===
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===Where are the [[NetworkWeaver]]s [http://google.com/search?q=NetworkWeaver g] ?===
 +
''Martin'': Fridemar, to do as you suggest one must know who the Wikizens view as opinion leaders, which I don't know. I view that as a task for folks that are much better versed in Wikizen communities than I am - where are all those network weavers when one needs them? [[MartinPfahler]]
  
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====The Traditional Way to Secure Income by Protecting Project Secrets====
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''Fridemar'': Martin, just a minute. I am looking for the page and leaving them a link to this section :-) Here I am back, offering you and all other peers the incentive of [http://www.aboutus.org/WeaversWanted#Call_for_Help_List WeaversWanted#Call_for_Help_List]
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''Martin:'' I think in general this is good, with one exception. If there is a cooperative structure having members, and they are involved with R&D activity that can lead to a new invention or technology, and these members have contributed their own money, to fund this project, then in today’s business environment (as well as in the foreseeable future) the members are likely to make bigger financial gains if ''they keep some of the details of the R&D project secret''. That enables them to gain intellectual property and generate licensing revenue. With complete transparency they would lose this passive revenue stream.
 
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====A bold CreativeCommons Alternative====
 
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''Fridemar:'' Yet, there is a bold CreativeCommons alternative to this traditional approach. Please have a look at [http://google.com/search?q=RepRap RepRap]. The first search result's entry lets you find a non-profit organization, that develops a hightech 3D printer for [[DeskTopManufactoring]]. Anything is open and shared. Normally a 3D printer prototyp would cost 20,000 US$. These people give you all the information to build a prototype with materials, that cost 400 US$. Contrasting to the 'Linux OpenSource movement' they started the OpenProcess straight from the beginning and are confident, that at last they will have more momentum than any proprietory process.
 
  
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===Advice of Ward Cunningham===
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''Martin'': Also I talked over the phone today with Ward Cunningham (who is now with aboutus), about the possibility of having this effort, at some later stage of evolution, tie into aboutus. Ward as usual gave me some excellent advice and input. Some of this issue revolves understanding that aboutus has early stage risk investors that want to see a certain aboutus focus, which might not align with this risk sharing/cooperative forming focus - but then again it might - perhaps through some type of aboutus [[TOPSOIL]] integration (after aboutus further develops [[TOPSOIL]].
  
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Fridemar, I am familiar with some of these "open innovation" efforts. The 3D printer is much lower in price – but how many decent paying “printing designing/manufacturing” day jobs are sacrificed for this lower price? I can imagine a world where everything costs only $10, but there are no day jobs left for anybody to earn the $10, so they still can’t buy it - and the only folks with the money, are the relatively few entities that maintain or started up a commons – just as today the content on Wikis does not enable day jobs for the many content providers, only for those few starting and maintaining the Wiki site.
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===And what about Dow?===
 +
''Fridemar'': And what about your contacts with [http://google.com/search?q=DowChemical DowChemical] ?
  
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With your 3D example I suspect you will find it much easier to gain technical talent willing to provide the printer expertise to the commons, related to the engineering features, than to the material that comes out of the nozzle. Go to the material science community and ask the PhD research talent that you would like them to invent, and then contribute without payment to the commons, a radically new material for deposition or extrusion from the digitally controlled nozzle, I suspect few takers – a different scientific field is involved in that type of research work.
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''Martin'': In any case first I try to gain some more tangible results with Dow, that might help push this focus forward. [[MartinPfahler]]
  
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Note I am not “pro patents” – they are expensive and slow to get, and expensive to maintain. In contrast I am anti-free rider, because that creates a dynamic that makes lots of people less motivated to contribute to early stage finical risk. In such regard we need new ways to prevent free riders from taking advantage of people that have put their “skin in the game”. [[MartinPfahler]]
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[[WorkInProgress]]
  
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====“How do you Plan to Maintain a Barrier to Entry?”====
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===OpenBusiness Initiatives===
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''Martin:'' People involved with computer technology are often familiar with “open source” modes. Computer technology relative to the entire world of all technologies, is a small segment of the larger world, and the vast majority of this “other” technology world is still heavily grounded in secrecy and patents. To gain a better understanding of "why?", try to pitch an R&D project to an angel investor, and you will discover one of the first questions they ask you is, “how do you plan to maintain a barrier to entry?” – without the typical secrecy and patents you are unlikely to get their money.
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''Fridemar'': Sam, it would be great, if we could integrate as many activities as possible in the OpenBusiness scene. As you are an expert in this domain, it would probably make a lot of people happy, if you and y/our peers could help to co-build the above WikiTrail, because the material you overview appears to me meanwhile mind-staggering. Which of the next links of your initial link are the most important ones in your view?
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====OpenProcess capable Projects====
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Instead of reorganizing your first linked page (and the successor pages, what is not appropriate), it appears to me much more convenient to visit this page with (one ore more) TrailFire annotations, that can grow organically and at last comfortably be traversed like a diashow.  
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''Fridemar:'' One possibility is to concentrate on projects, that are OpenProcess capable, like OpenSource development, but also OpenEngineering like visible in the RepRap project.
 
  
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What does "OpenProcess capable" mean? One process issue that I worry about is the generation of so many new terms, that a new comer gets overwhelmed in trying to understand what is going on, then simply drops out.[[MartinPfahler]]
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{| style="background:#E0F68C" align="center"
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|
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However we need all our creativity to invent income models for CreativeCommons people that these great people get food on the table.
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[[User:Fridemar|fridemar]] 16:58, 8 August 2007 (PDT), publishing the discussion on the SocialCommonWealth blog, accessible by the PermaLink [http://fridemar.blogspot.com/2007/08/risksharingpassivereturn-discussion.html risksharingpassivereturn-discussion] , where you can amplify the initiative by clicking the CommunityConnectorButton there. Doing it empowers the movement for the Commons.
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|}
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====Again: “How do you Plan to Maintain a Barrier to Entry?”====
 
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''Martin:'' I think the aboutus founders pitched a version of, “our barrier is the community we are building up – it is not fast or easy for a potential competitor to do this – and community building can also be more difficult than trying to copy a typical widget technology”. The point is, even with aboutus, where there is passion for “openness”, some of their risk investors want to know, “what are your barriers to entry?”
 
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====Opportunities in OpenBusiness and Non-OpenBusiness====
 
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''Fridemar:'' I think in the short run, there are opportunities to invest in both: OpenBusiness and Non-OpenBusiness, but in the longer run intellectual property mechanisms and non-open R&D will be inferior and diminish into thin air. See (must find the mindstretching article).
 
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====Still common Secrecy and Patents====
 
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''Martin:'' In other fields of technology one is not dealing with networking issues like with the Internet, rather stuff one cannot shove through a digital pipe – like “widgets” – and in those cases it is still common to have secrecy and patents for new innovation.
 
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====To be worked into subsections====
 
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====Agreements====
 
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''Martin:''
 
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* disclosed owner identity – I’m for it
 
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* low cost involvement (of the Wiki-Entrepreneurs, PennyBank.Biz) – I’m for it, if it is high cost then few people can afford it.
 
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====On Discussion====
 
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''Martin:''
 
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* disclosed financial status – Not sure what this means?
 
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''Fridemar:''
 
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* All assets in the domain portfolios
 
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* consolidated account statements
 
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''Martin:''
 
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* Efforts by Public Collaborations to Develop Domains
 
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After reading about your domain vision, I still am not sure about how it works. To me it reads a lot like the following pitch: I go to a person on the street and say, “would you like to invest in a neat company name I just thought up? The upside for you, if you invest your money, is that this neat company name will turn into a real company and make real profit, at which time you will gain a return on your investment” – to which I suspect many folks would reply to this pitching person, “no thanks, first show me you have a real company with real products, making real profits”.
 
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''Fridemar:''
 
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:-) Your formulation is provocative and helpful to make the point clear.
 
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* Portefolio Collaborators don't go to anyone on the street. Instead of this they build their portfolios within AboutUs, where there are a lot of smart, friendly and open community oriented people.
 
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* They invite qualified peers to share by writing this in the wiki.
 
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* Peers qualify themselves by offering to "share alike" their open portfolios
 
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* Currently all portfolio owners are in charge of all their domains in their account, but after a sharing agreement, they pledge a share of the resp. gain, when the share is sold. (I.e. not necessarily at the time, when a real company with real products .. has evolved)
 
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* The nice thing is, that pledges can be reconfigured, when all involved partners agree. This reflects the involved timedependant collaboration profiles of each peer.
 
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* There are no financial transaction costs when sharing agreements are made in public and authentificated on their blogs.
 
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* Each open portfolio operationalizes the GoalStatement / InterestStatement in a clearcut way and can be monitored by the community, which builds trust.
 
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====Gaining Critical Mass to attract support of Corporations====
 
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''Martin:'' Fridemar, I continue to read about this or that tiny community or passionate “tiny” group on the Internet, brainstorming the types of issues we have been recently discussing. In such regard what I see as a process problem, is all of the many tiny pockets of people with similar interests, seem to get nowhere, because they can gain no larger awareness of the general populace, thus no critical mass.
 
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Other people on the Internet with related passions have come to the same conclusion, and then post things like, “this is the new place to come, for all of these many fragmented communities to join forces, to gain the critical mass” – and too many are claming such “come here to join forces” places, which itself is fragmenting.
 
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I think a possible way around this current “on-line” dynamic is to get the support of a large corporation with deep pockets, already having a name the general public recognizes, so that a relevant effort gets on the public’s radar screen.
 
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In my dealings with the mentioned corporate executives I am bracing for the day when they ask me, where is this community of Internet folks, having passion for these issues?” -  and then, to be candid, one has difficulty showing it, because the demographic is so fragmented and hard to see. This is rather ironic because on the Internet I see so much talk about community building, network weaving, social connectors, in other words “lots of talk” about connecting people of common passion and interest – yet then it still does not seem to be happening – at least not in the types of topic areas where we seem to have cross interests.
 
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If a larger group could ever get to the point of in effect saying in unison “we are here”, I suspect some large deep pocketed corporations would be willing to provide some relevant funding and support. Five passionate people brainstorming off in a corner is not going to impress these large corporations, they want to see big community numbers. If anybody has any ideas on how to demonstrate those numbers exist (such as people with interest in new ways of sharing early stage financial risk, and that also enabling better income opportunities), please let me know. [[MartinPfahler]]
 
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''Fridemar:''
 
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Thank you Martin, it is 3:35 in the morning and I must go to bed now, to get new energies for continuing our conversation and actions. I think we need a new page where we collect the tools and make efforts for [[GainingCriticalMass]] [[StrengtheningTheGrassRootsMovement]].
 
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[[User:Fridemar|fridemar]] 18:43, 1 August 2007 (PDT) embedding the whole page in the [http://SocialCommonWealth.com SocialCommonWealth.com] Blog.
 

Latest revision as of 21:49, 19 August 2007

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Contents

Problem

Assume you read a posting on the internet, about a project, perhaps needing a million dollars to execute, that for whatever reason gives you motivation to contribute some of your money, with the expectation of getting some money back, that is in excess of your original contribution.

This dynamic has potential to gain execution of more projects that are expensive and involve high risk, by having many average folks, typically contributing less than $100, share in the risk.

Today it is illegal to make such project postings to the general public on the internet, because they involve the contributor having potential to make a passive return on their investment.

The SEC views such Internet postings as ripe for many scam artists to create “give me your money and I’ll make you lots of money” postings, that could create hardships for people having little financial sophistication, when the scam artists steal their money. The downside is these existing SEC laws are preventing financial risk sharing by large numbers of people, having good intent.

Purpose

Develop a List of Safety Procedures

To break this barrier it is proposed to develop a list of special procedures, that must be followed, by anybody wanting to make such posting.

Develop a List of Self Policing Methodologies

It is also proposed to develop a list of methodologies that can make this system self policing, to prevent the bad apples from corrupting the new system of money pooling/risk sharing.

Seeking an adequate "legally recognized" exemption status

It is then proposed to give these lists to lawyers with expertise in SEC, cooperative, business, and cyber law, so that they will add their credibility and expertise, then send the resulting suggestions to the SEC, in hopes of gaining a new “legally recognized” exemption, or new classification of investor, to enable such postings to be made “legally” on the Internet.

Preventing the Worst case

It is suggested that we do not approach the list from the attitude that humans are inherently good people, and thus with enough carrots built into the system, there will be little or no fraud. I suspect the SEC will view that attitude as naive. In contrast to assume the worst case human behavior, and then figure out ways to check or prevent it.

Assuring Honest Effort

People making such project postings have potential to raise lots of money. In return they should expect to put in some effort and “pain”. In other words there should be procedures to follow and hoops to jump through. However they should not be expensive, because that would exclude too many people from making a posting.

Criteria for checking the Sincerety of new Entrepreneural Offers

A straightforward Hoop, that doesn't scale

“Who are you?” If I give you my money, I want to know who you really are. One way to do this is to hire a good private investigator to dig up the skeletons in ones closet. However that does not scale well, and is expensive. What other ways to prove who you really are?

Other hoops that might scale

Public Assessment/Vouching by Independent Renown and Trusted People

a) If you have projects with big social or other upsides, then it is not unreasonable to expect that you did not just think of this yesterday, but rather have been working on it for some time, and in such activity you have come into contact with others. Have these “others” vouch for you, in a transparent way on the Internet. If these “others” are your brother or somebody I can’t verify, that is not likely to help you. In contrast if it is a teacher, an attorney, a scientist, a non profit director, the pastor of your church, a well known community leader, etc. – then you gain more of my trust.

Disclosing Identity in a reliable way

b) Tell me where you live, so if something goes wrong I can find you. If you have only a mailing address, or a boiler room operation, don’t bother making the posting. Some might argue, “but this will leave me open to having strangers find me, when I have done nothing wrong!” That is the “transparency” price you must pay in exchange for the opportunity to raise large amounts of money.

Other things that might be done:

Care for Extreme Financial Transparency

1. Agree to, and implement, “extreme” financial transparency. The community should develop these transparency standards. The point is if one gets money, the flow of that money should be easily viewable by the public, at any time.

Minimize the investment needs

2. Agree to ask for no more than a smaller amount of money, for example less than $100, from an individual. The point of this new system is enabling small contributions rather than large. If you want to solicit $100k from a deep pocket, there are already procedures to solicit “accredited” investors via the Internet, that will not have the SEC breathing down your throat.

Balance Carrots and Stick

What is the carrot? The carrot in this system is that people making postings have potential to raise lots of money from the public, also potentially quickly.

What is the stick?

Brainstorming section

The stuff of moved to RiskSharingPassiveReturnBrainstorming.

Author credit

This page was created by MartinPfahler and subtitled by fridemar 02:31, 5 August 2007 (PDT)


Discussion

PeerInvest

Sam: Just wanted to leave some quick feedback that I think this is interesting. I also wonder if it is not already legally possible for people utilize for-profit cooperative or corporate structure to accomplish the same thing this article talks about, without having to beg the SEC for an exemption? This is similar to an idea I'd been rolling around in my head, and had posted here about a year ago: http://socialsynergyweb.net/cgi-bin/wiki/PeerInvest --SamRose 19:52, 7 August 2007 (PDT)

FourTypesOfInvestingForCooperatives

Martin: Sam, thanks for your input! With some attorneys (experts in cooperative and SEC law) I currently brainstorm with, we are talking about three different types of potential people that could pitch their money into a virtual pot, and also be part of a for profit cooperative, so that any financial gains made by the cooperative could be divided amount the members: Enabling all three types, to pitch into a virtual pooling pot, can fill the pot faster, and likely with more money.

Active Investing as PeerInvest in an OpenBusiness

Fridemar: Welcome Sam for joining the conversation. I think, with your PeerInvest g concept you open up a fourth source of RiskSharingReturns g , we can name RiskSharingActiveReturns g in the context of our conversation. The peers take actively part in a (not necessarily non-profit) organisation, paying fees, making pledges or even donate for the service, so that they can expect revenue returns, in case their project succeeds. As an OpenBusiness all work and transactions of the organization are continuously monitored in public. Martin, could you discuss this with your attorneys too? As a convenience I am starting a WikiTrail, named PeerInvestTrail, so that we can comfortably traverse the material, connect it, comment it and automatically inviting new collaborators.

WorkInProgress

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(thumb doesn't appear to work, please help)

If you already have the TrailFireFoxPlugin installed, you can automatically see the annotation mash starting on this page, otherwise try this link to the first annotation.

InvestingForResults

Martin: a) type 1: This person (has no deep pockets and) contributes money because they want to use the results of a project themselves. For whatever reason they are motivated to contribute only with this upside.

Fridemar: I inserted the parentheses, to include benevolent sponsors (philantropists).

InvestingForResultsAndMoney

Martin: b) type 2: This person is just like type 1, with one important exception. They are not motivated enough to contribute their money, unless the project offers some type of passive investment stream (cannot guarantee it, but offers it).

InvestingForMoneyOnly

c) type 3: This person is a deep pocketed accredited investor. This person seeks only passive return and does not intend to personally use the results of a project.

Soliciting InvestingForMoneyOnly needs Legal Prerequisites

On the Internet one can already solicit the type 3 person legally. The gist of the process the target person must be an 

* Accredited Investor: - which is a fancy word for saying 
one has high wealth, such as over a million dollars. They also use 
the term "sophisticated investor", here the implication is that they 
assume one of low wealth is more easily cheated by scam artists.  then 
* By Priviledged Access only: i.e. by a process such as a
secret password, by which this person can gain access to a project posting,
where a passive return is being offered.


Martin: Fridemar, the term used by the SEC is "accredited investor" or "sophisticated investor"...

SEC definition of accredited investor:[[1]] Iv terms of a person note it states this person must be:

  1. a natural person who has individual net worth, or joint net worth with the person�s spouse, that exceeds $1 million at the time of the purchase;
  1. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or

Info about soliciting accredited investors via the Internet: [[2]]

What are NoActionLetters ?

Martin: The SEC web site has lots of related information, also see "no action" letters. These are letters produced by the SEC after they review a new process mode, that in effect says, "we promise not to sue you if you try this new mode of dealing with money" - which is what folks trying new "stuff" want to see before they invest lots of time and money. For more information see this section of the SEC web site [[3]]

Soliciting InvestingForResults is Legal

Martin: One can solicit the type 1 person with a project posting legally, because one is not offering this person money in exchange for their contribution, rather some type of other tangible resulting from execution of the project.

Soliciting InvestingForResultsAndMoney is Illegal

Today it is illegal to have a posting for the type 2 person, where one is offering the potential upside of passive revenue - it is against SEC regulations. This is where our attorneys are currently brainstorming to gain a novel legal mechanism or SEC exemption, etc. MartinPfahler

Actual and potential Support for the project

Sam: Martin, have you had any response from the SEC so far? --SamRose 08:31, 8 August 2007 (PDT)

Legal Experts already involved for a relevant Pilot Project

Martin: Sam, we are not yet that far. If a “non attorney” tries to get action out of the SEC the chances are it gains less serious attention than if presented by relevant legal experts. And such legal experts that we have involved, are not going to spend that time and effort unless they see some potential funding for a relevant pilot project.

Potential support from Catherine Austin Fitts

Sam: Hmmm...I have to disagree. I believe that if inquiry methods were organized in the right way, it is plausible that enough legal experts would pool their knowledge and collaborate towards creating a framework that is legal, even without compensation, but for the greater good. One definitel legal expert who would likely be available to put time into this is Catherine Austin Fitts, among other people. She's already created some frameworks in the form of http://solari.com.

Fridemar: Sam, for organic growth of this page and easier edit access to each conversational unit , I inserted section titles, inviting new participants to join our non-linear wiki-conversation. Let's find and motivate as much support as possible for the common benefit ...

Potential support from non legal Experts

Sam: Furthermore, I sincerely believe that it is possible and plausible that non legal experts shall be able to formulate, organize, and establish and fund the existince of for-profit micro-investing frameworks. In particular, I am personally interested in this existing framework: http://www.sec.gov/investor/pubs/invclub.htm Because, I think that it can help people build up the trust among each other that is going to need to exist to be able to pool money and invest. As far as projects seeking funding goes, I think that it is pretty inexpensive to establish yourself as a private company, LLC, or other legal entity and sell shares, even in small amounts. This infrastrcture already exists, unless I am missing something that you are talking about here?--User:SamRose 12:07, 19 August 2007 (PDT)

Invitation to a novel Division of Dow Chemical

In such regard in mid September I have been invited by a novel division of the Dow Chemical Corporation (a division that is very interested in these issues), to further explain a pilot project proposal that involves this type of risk sharing, and that would enable people to interface with Dow under a novel for profit umbrella.

Fridemar: Such a project needs a lot of support to prosper. What kind of support is on the way?

Cooperative Attorney and hopefully by a Bigger Number of Wikizens

Martin: A cooperative attorney will also join me in this effort. After this, we will have a better read on Dow, and if positive, the involved legal experts will likely contact the SEC. At this stage, after meeting with Dow in Sept, I would sure like to have more than you, me, and Fridemar in this brainstorming discussion – rather I’d like to show Dow executives there is a Wiki space filled with hundreds or thousands of people with this topic interest (big corporations like Dow are not impressed when they see just three people off in the corner – they want to see bigger numbers of people).

Fridemar: To get a bigger number of Wikizens activated, it would be helpful to get some opinion leaders involved. Did you try something like this? (I wouldn't have asked you this, if this wasn't a wiki, where everyone can make a "vaticinium ex eventu", i.e. be a good prophet :-)

Where are the NetworkWeavers g ?

Martin: Fridemar, to do as you suggest one must know who the Wikizens view as opinion leaders, which I don't know. I view that as a task for folks that are much better versed in Wikizen communities than I am - where are all those network weavers when one needs them? MartinPfahler

Fridemar: Martin, just a minute. I am looking for the page and leaving them a link to this section :-) Here I am back, offering you and all other peers the incentive of WeaversWanted#Call_for_Help_List

Advice of Ward Cunningham

Martin: Also I talked over the phone today with Ward Cunningham (who is now with aboutus), about the possibility of having this effort, at some later stage of evolution, tie into aboutus. Ward as usual gave me some excellent advice and input. Some of this issue revolves understanding that aboutus has early stage risk investors that want to see a certain aboutus focus, which might not align with this risk sharing/cooperative forming focus - but then again it might - perhaps through some type of aboutus TOPSOIL integration (after aboutus further develops TOPSOIL.

And what about Dow?

Fridemar: And what about your contacts with DowChemical ?

Martin: In any case first I try to gain some more tangible results with Dow, that might help push this focus forward. MartinPfahler

WorkInProgress

OpenBusiness Initiatives

Fridemar: Sam, it would be great, if we could integrate as many activities as possible in the OpenBusiness scene. As you are an expert in this domain, it would probably make a lot of people happy, if you and y/our peers could help to co-build the above WikiTrail, because the material you overview appears to me meanwhile mind-staggering. Which of the next links of your initial link are the most important ones in your view? Instead of reorganizing your first linked page (and the successor pages, what is not appropriate), it appears to me much more convenient to visit this page with (one ore more) TrailFire annotations, that can grow organically and at last comfortably be traversed like a diashow.

fridemar 16:58, 8 August 2007 (PDT), publishing the discussion on the SocialCommonWealth blog, accessible by the PermaLink risksharingpassivereturn-discussion , where you can amplify the initiative by clicking the CommunityConnectorButton there. Doing it empowers the movement for the Commons.



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