3 comments

• 

  Isabel Wang

  2 years ago

  Hi Matt,
  
  I'm not 100% sure I agree with Rob. Microchunking didn't work in his case, but crowds don't *always* produce mediocre work. For instance, most of the drawings on http://www.thesheepmarket.com/ are really awful, but the project as a whole is way cool. As Jeff Howe writes in his Wired article (http://www.wired.com/wired/archive/14.06/crowds...), crowdsourcing requires different skills compared with traditional management. The crowdsourcer will only be able to create value if he's successful in setting up filters for sifting through contributions from the masses.
  
  But back to Swaptree (which has been in private beta for ages!) and the entrepreneur exchange, When you join Swaptree, it asks you to submit two lists: books/CDs/games that you own and want to give up, and items you're willing to accept in exchange. The system scans all users' haves and wants and is able to offer multi-lateral trades. For instance
  
  A sends item to B
  B sends item to C
  C sends item to A
  
  As I'm typing, though, I'm realizing that this concept might not work for startups. Swaptree assumes that all used CDs have equal value, but the same can't be said of Web 2.0 companies. I doubt any group of participants will be able to agree on giving their shares 100% equal valuation.
  
  -Isabel
  reply
• 

  matt_winn

  2 years ago

  Isabel:
  
  So glad you pointed me to thesheepmarket. What a fantastic project, and a terrific way to purchase some unique stamps!
  
  Having heard a ton of startups voice valuation expectations (including the startup I worked at prior to Chrysalis), you're dead on in suspecting that agreement on parity would be a difficult hurdle. I'd think one could remedy the issue by creating a pooled partnership that requires applicants be at a certain stage (say, less than one year old) and accept parity at the point of application, knowing that only promising startups would be chosen by an experienced committee. There's no reason, though, that a group "exchange" couldn't be managed with appropriate bid/ask tools.
  
  Best,
  Matt
  reply
• 

  Rob

  2 years ago

  Isabel,
  Re: microchunking, I agree that crowds can sometimes do cool stuff, but what's cool and what's profitable are two very different things. Most web2.0 companies are doing something cool, but only a small percentage are going to be able to effectively monetize their offerings.
  
  The biggest problem with crowds is that crowds need an incentive to take the project seriously. Whether or not to buy a stock has much more serious consequences than whether or not to vote for a story on Digg. That's why the former decision is taken more seriously than the latter, and why WoC works for markets better than for news aggregators.
  
  Anyway, I love the idea of a private entrepreneur exchange. It allows entrepreneurs to diversify and spread some risk around. As a side result, I think you would find that the cross ownership aspects would encourage entrepreneurs to help each other by sharing ideas, contacts, etc, which could in turn improve the likelihood of success.
  
  There would probably be several conditions that would need to be imposed - one of which would be a limitation on #of "shareholders" in order to bypass accredited investor SEC regulations. The other would be a requirement of maximum disclosure - biz plans, resumes, financial status, etc. so that entrepreneurs could value the companies accurately when they trade equity. I would be more than happy to give up 5% of my startup for to get a couple of collective percentage points in other ones.
  reply