by Anthony J. Bradley | October 2, 2014 | 2 Comments
Currently, there really is no such thing as equity crowdfunding. This is ironic since about 18 or 36% of the 50 sites I looked at consider themselves equity crowdfunding. I am basically telling them they don’t exist (at least as they seem to consider themselves). Here are my arguments as to why.
- They are exclusive. All of the sites I examined are currently limited to Accredited Investors. This is to be expected since it is the law (in the US at least). However, they are not positioned well to adapt to Title III of the JOBS Act (crowdfunding) when the SEC does deliver approved rules. It does not seem that they intend to adapt. They are exclusive even with accredited investors. In many cases you have to apply to invest. In most cases, the investee chooses the investor (which is the opposite of crowdfunding). This exclusivity also applies to investment opportunities. According to some of the sites’ FAQs, most internet-based intermediaries (or portals as the JOBS Act calls them) heavily vet the opportunities. Some FAQs say they accept less than 5% of opportunities. So the crowd doesn’t vet the opportunities. The intermediary does. This traditional funding “gate”hardly brings forward new startup opportunities. As a consequence there are usually less than a handful of open opportunities on any one portal. Not exactly a thriving crowdfunding marketplace. In addition, many of the sites explain their investor selectivity saying that the investees don’t want a large number of investors because it can hurt their downstream chances for traditional venture capital funding. So they want to choose the fewest number of accredited investors that will give them the most funding. This is a red flag. They really are not interested in crowdfunding. This is traditional angel or private placement investing extended to the internet. I call this Angel iFunding.
- They are expensive. They are expensive for both investors and investees. There are some great analyses of crowdfunding regulatory costs that make the point that raising significant dollars via crowdfunding is not economically feasible for many startups. In many instances there also are heavy transactions fees for both investors and startups. But these factors are still not as burdensome as the current minimum investment requirements. The majority of portals I reviewed had minimums between $10k and $25k USD per investment. There were a few who advertised minimums as low as $5k or even $1k USD. But when I looked at the actual opportunities posted there were none below $10k. Now you could argue that until Title III of the JOBS Act is enacted, the 2000 investor limit by law makes this necessary. And I would agree. But the question is, will this change? It would need to change because these investment minimums are heavy for accredited investors but crushing for the crowd. With the Title III investment limits on crowdfunding a $10k minimum would preclude anyone earning less than $100,000.00 per year. And that is if the investors were willing to put their entire annual crowdfunding investment “egg” in one basket. Not likely. Part of the power of crowdfunding is distributing the funding across a large population of people which also distributes the risk. Due diligence has an entirely different meaning when investing $100.00 or less. So let’s look at due diligence.
- They are opaque. The investment profiles on most of these sites provide very little information on the opportunity and certainly not enough information to make an investment decision. I suppose it is intended to entice the potential investor. Investors must request access to additional materials. I would imagine, considering the investment minimums and the risks of equity investing, that investors would want to do a significant amount of due diligence which might even involve conversations with the startup’s leadership. This kind of due diligence between investors and investees doesn’t scale. And it is anti-crowdfunding.
- They are indirect. With many of the sites you invest in a fund not directly in the startup or you have to actually execute the investment working directly with the startup (the portal playing an advertising/matchmaking role). Wefunder.com is an example of a portal where you invest in one of their funds, a WeFund, and the fund invests in the company. You own a stake in the fund. The fund owns a stake in the company. They are very clear that you have little control over the investment. They decide how and when to execute an exit event. You are along for the ride. Other sites seem to be simply reaching out to accredited investors through the internet to raise capital for funds they are starting. These funds can invest in numerous companies that would qualify under the parameters of the fund. Some of the portal fund managers take 20% of the exit event profit off the top. What a great model for them. They risk your money and take 20% if the investment succeeds. If they can do more volume and keep their management overhead in check they can make a lot of money without bearing the investment risk.
So if they are not crowdfunding, what are they? They are an extension of private placement. They are what I call iFunding. They take the current private placement model and are trying to use the internet to find additional sources to raise capital for their funds and projects.
All of these inhibitors combine to make it a challenging proposition for accredited investors. Remember they are not investment professionals. They have day jobs. What are the chances of large numbers of accredited investors spending the significant time it will take to investigate several iFunding “portals” to find potential investments, request more information on those investments, complete their due diligence, then apply to invest $10k or more and run the risk of being told, “No thanks, you can keep your money.” In my opinion, this model won’t fly even for accredited investors never mind the crowds. The people who will take advantage of this opening up of private placement will mostly be those who are already familiar with the investment and the entrepreneurs involved.
What would need to change for real equity crowdfunding? Just about everything. Their whole approach would need to change, obviously including the four factors I have described above. Will they make the change? Probably not. Crowd is king and because they don’t seem interested in the crowd, they won’t get the crowd. It is more likely that a reward based site like Kickstarter with a thriving marketplace could evolve to equity crowdfunding before these iFunding sites.
I’m always interested in opposing or supporting positions. If anyone knows of an “equity crowdfunding” site that significantly departs from my characterization above then I’d love to look at them.
Category: Crowdfunding Uncategorized Tags: Crowdfunding
by Anthony J. Bradley | September 24, 2014 | 5 Comments
I have finished a detailed examination of 50 sites (list provided below). I also have read and examined the JOBS Act of 2012 myself to see the many, and valuable, interpretations of it firsthand.
This examination has led me to the basic conclusion that most of these “crowdfunding sites” are not actually crowdfunding. And that is ok. There still can be significant “funding” value in them. But there are some fundamental and significantly different aspects to these sites that both investors and entrepreneurs must understand to be successful when using them. Just as a sedan, a sports car and a truck are all transportation vehicles but each has a specialized purpose these sites are good for some funding and investment goals and inappropriate for others. Here is my dissection in summary.
- Crowdfunding platform
- Crowdfunding marketplace
- Charity crowdfunding
- Reward crowdfunding
- Debt crowdfunding
- Equity crowdfunding
Yes, I am introducing a new term. iFunding is internet assisted traditional funding. In other words, the funding model has existed for years if not ages but now it is easier or extended. A good example of this is private placement. Investopedia defines private placement as, “The sale of securities to a relatively small number of select investors as a way of raising capital.” I think we can agree that this definition is not crowdfunding.
However, Title II of the JOBS Act of 2012 opens private placement investments up for public solicitation to accredited investors (a bigger selection investors) and Title IV raises the number of accredited investors to 2000. These changes have led to iFunding for private placement. Examples are AngelList, Circleup, Crowdfunder, Early Shares, EquityNet.com, Funders Club and Wefunder. I’ll dedicate a whole post to this category next time.
Another iFunding scenario is raising money from friends and family for personal reasons or causes. We have been raising money from friends and family for a long time now. The internet may have made it easier (if you are willing to shell out 5-8% cost of funds raised) but it certainly is not new or groundbreaking. Examples are Fundable, GoFundMe, Kapipal and Tilt.com
Crowdfunding involves large numbers of people collectively raising large sums of money through small individual contributions to support a particular opportunity. This is a common and general definition. But taking it to more specificity in the spirit of crowdfunding’s innovation and potential the definition is more accurately stated as; a thousand or more people from the general populace (with no pre-existing relationship) rally to collectively raise tens of thousands of dollars or more (using the internet) through individual contributions less than a thousand dollars but realistically less than a hundred dollars.
I fully realize that there are many who would disagree and prefer a much more general and widely encompassing definition. But if we want to herald crowdfunding as “The Next Big Thing” with the potential to disrupt the financial industry then we must admit that using a web site where my friends can pool birthday gift money to collectively buy me a new set of golf clubs really doesn’t cut it. Convenient, yes. Disruptive to capitalism’s financial system, no. iFunding, yes. Crowdfunding, no.
Crowdfunding sites can come in two forms; platforms and marketplaces.
Crowdfunding platforms are sites where people can build their own crowdfunding site or construct their own experience but then are expected to draw their own crowd often via email or social media. This does not seem to be a thriving sector of crowdfunding. Examples are clickstartme.com, CreateAFund, fundly.com and invested.in.
Marketplaces are much more prevalent. A marketplace has a crowd of funders and a good set of funding opportunities and brings them together via a mostly common experience. If you want to raise funds you need to build a profile but not your own site experience. You join other people with funding opportunities and you benefit from an existing crowd vs. needing to draw your own.
And there are four types of marketplaces (though some will try to blend more than one type in a single marketplace); charity, reward, debt and equity.
- Charity Crowdfunding: With charity crowdfunding sites you donate money to cause with no expectation to receive anything back except the warm feeling of giving. Examples are Crowdrise, Experiment, justgiving.com, Razoo and youcaring.com.
- Reward Crowdfunding: With reward crowdfunding you expect to receive some good, service or trinket from your contribution. Examples are Bloom, CrowdBnk, fundageek.com, indiegogo.com, KickStarter.com and RocketHub.
- Debt Crowdfunding: with debt crowdfunding you expect to receive interest payments on your investment. Examples are Lending Club and Prosper.
- Equity Crowdfunding: with equity crowdfunding investments you expect to own a stake in the enterprise.
One lone site, Bolstr, has a revenue sharing investment model. I’ll position them as the exception to the rule.
So there you have it, my take on the breakdown of the space (at least as represented by the 50 sites I examined).
Here are the stats.
- 52% of the 50 are iFunding and 48% are crowdfunding.
- 29% of the crowdfunding sites are platforms and 71% are marketplaces
- 26% of the crowdfunding marketplaces are charity
- 47% of the crowdfunding marketplaces are reward
- 21% of the crowdfunding marketplaces are debt
- 0% of the crowdfunding marketplaces are equity
- 14% of the 50 are defunct
In future posts I’ll dive into the specifics of this framework and explore the current state and future potential of each. I’ll give you what I think works and what needs to change for crowdfunding to really disrupt and transform.Comments welcome.
As promised, here are the 50 sites. If I missed any really cool ones let me know. I will continue to add to the list.
AngelList, banktothefuture.com, Bloom, Bolstr, Circleup, clickstartme.com, CreateAFund, Crowdbank, CrowdBnk, crowdequity.com, Crowdfunder, crowdfundingbank.com, Crowdrise, dreambank.org, Early Shares, EquityNet.com, Experiment, Fundable, fundageek.com, Funders Club, fundingcircle.com, fundly.com, fundrise.com, giveforward.com, GoFundMe.com. indiegogo.com, invested.in, jumpstartcity.com, JumpStartFund, justgiving.com, Kapipal. KickStarter.com, Laraghfinance.com, Lending Club, MicroVentures.com, Petridish, Prosper, Razoo, realtymogul.com, Rock the post, RocketHub, Seedinvest, somolend.com, techmoola.com, Tilt.com, uinvest.com.ua, venturehealth.com, Vunded, Wefunder, and youcaring.com.
Category: Crowdfunding Uncategorized Tags: Crowdfunding
by Anthony J. Bradley | August 20, 2014 | 1 Comment
What do you envision of when you think of a Crowd? I think of a place with the bustling energy of people moving to and fro in a flurry of activity. Either somewhat synchronized like a New York City street during pedestrian rush hour or apparent pandemonium like 7:00 AM at Tsukiji Tokyo, the largest fish market in the world. It is hard to imagine a crowd without activity (picture is one I took at Fiesta in San Antonio so no copyright issues here).
Yet activity is missing from the vast majority of crowdfunding sites. Even those that I believe do have activity don’t make that activity apparent to site visitors.
Crowd participation in crowdfunding should take three major forms; 1. crowds of people looking to provide funding, 2. crowds of people looking for funding and 3. crowds of people helping each other determine what to fund. All three of these are critical to a well-functioning crowdfunding environment.
There is a whole set of sites that call themselves or are categorized as crowdfunding when they are not.
First, I addressed the missing crowds from investing in my last post since, at least in the US, you need to be an accredited investor (about 1% of the population) to participate (at least until title III of the Jobs act of 2012 is enacted). I won’t belabor that point now. Some return-based sites actually require you to be authorized or accepted to invest. You “apply” and they will contact you, I guess, if you are worthy. This is not crowdfunding. It might be some alternative to or extension of the traditional angel or VC model, even a good one, but it isn’t crowdfunding. Also, if your minimum investment is $1000.00 (most I’ve seen are $10,000) you are not attracting the crowd.
Even those Marquis donation/reward sites like Kickstarter and Indiegogo do a poor job at exposing busting activity. How many people are on-line now? How many opportunities are being explored right now? What are they doing/what are they funding? The closest they get to is what funding opportunities that are “hot” or “trending” and even then I don’t know the freshness of this categorization. On most crowdfunding sites I feel like I’m the only one there. A crowd of one?
Second, if your environment has fewer than 50 open opportunities, as many, many do, I’m not sure how it is considered a crowd. And if the site like Wefunder and AngelList “hand selects” a few highly vetted funding opportunities and controls the investment fund then again, it is not crowdfunding. I repeat, it might be some alternative to or extension of the traditional angel or VC model, even a good one, but it isn’t crowdfunding. Vet to make sure it is a real person with a real opportunity but let the crowd figure out the rest. The donation/reward-based sites are generally better at this but some of them like GoFundMe, Kapipal and Tilt don’t expose opportunities to the masses. Instead it is up to the fundraiser to bring the opportunity to their network. Again, this can be an effective approach but it is not crowdfunding. Call it groupfunding (I think this is what tilt calls it), friendfunding or networkfunding if you like but it is a different model. A crowdfunding site brings the crowd to the opportunity and the opportunity to the crowd.
Third, get the crowds involved in vetting and advancing the opportunities. Open comments is not enough (though many don’t even offer that). This is the “wisdom of the crowds” aspect which is sorely missing from crowdfunding. I have yet to see a single one that aggregates crowd feedback into a collective judgment of the crowds. No point system, star system, rating system or other way to segregate opportunities that have crowd support from those that don’t. Please point me to one that you’ve seen. One of the biggest benefits of crowdfunding is actually seeing if the masses, and often the actual market itself, is really interested in the idea.
It may seem that I’m being overly picky and selective in what is and what is not crowdfunding… but I have reasons. Some of these other models like friendfunding might be cool or interesting but they are not transformational (except maybe for the site founders). They are convenient. We have been asking for and collecting money from friends and family for a variety of reasons for a very long time. This just makes it easier. And tweaks to our current startup funding models might be improvements but they are not transformational. Additionally, building and participating in a true crowdfunding environment is very different than these other models.
Always open to your thoughts.
Category: Crowdfunding Uncategorized Tags: Crowdfunding
by Anthony J. Bradley | August 12, 2014 | 2 Comments
As promised though a bit late, I have now analyzed almost 50 leading crowdfunding sites. My overall view is that crowdfunding is in a very early and fragmented state.
I won’t call this a multi-part post but will continue to post on my findings and will continue regularly examining more sites. Here are my initial findings. I recently published on these findings with recommended actions in Gartner’s Hype Cycle for Social Software, 2014 (available only to Gartner clients.).
I estimate there are at least 1,000 crowdfunding sites in the U.S. and hundreds more in Europe and Asia. Most with very little activity. Across these sites are a multitude of fund raising models, business models and user experiences. Literally, it seems that every site has a different funding model and process. The market is in search of business and funding models that will work for the masses. We expect it will take a significant number of years, starts, failures and restarts before crowdfunding begins to significantly impact the financial industry.
This early stage is evident in its portion of the financial markets. We estimate, based on the number of sites and fund raising trends, that crowdfunding in its entirety has globally raised less than $100 billion. While this seems like a significant amount of money, compared to the $200+ trillion global capital markets (stocks and bonds) it is a rounding error. JPMorgan Chase alone holds, in assets, over 25 times the total amount of funds raised to date through crowdfunding.
Crowdfunding’s hype primarily comes from the media, and has not yet significantly spread to either the consumer or business worlds. The hype is based on imagining crowdfunding’s potential to disrupt current models for raising money. There are some very interesting and inventive models emerging that do stimulate visions of a world with very different financing opportunities.
Because crowdfunding is so broad, it is beneficial to examine two separate categories, since they move at very different rates, are at different levels of maturity, and have unique opportunities and challenges. I’ll call these categories return-based and reward-based.
With return-based crowdfunding (such as Lending Club, Prosper, EquityNet and Fundable), the contributors expect a financial return on their investment. This return may stem from debt interest payments, equity, profit sharing or other financial instruments. Return-based is growing slowly, primarily due to government regulations which restrict investing. Yes, the U.S. Jump-start Our Business Startups (JOBS) Act of 2012 will relieve some of the restrictions over time, but right now, investing is generally restricted to Accredited Investors (people who earn over $200K a year or have net worth of over $1M excluding value of primary residence). Accredited Investors make up about 1% of the US population… hardly the crowd. Other restrictions limit how many investors are allowed, and what they can contribute. As well, certain local governments have participation restrictions. All these restrictions currently keep the crowd out of return-based crowdfunding. Trust and user experience also stifle growth. This will be the case until larger numbers of contributors can invest smaller sums of money. This is the promise of the Title III “Crowfunding Exemption” portion of the JOBS ACT of 2012 (currently pending SEC implementation rules) that doesn’t restrict who can invest but how much they can invest in any one year. To top it all off, the current user experience in almost all the sites I’ve examined is uninspired and all but ignores the wisdom of the crowds.
Bottom Line: The 3 things required for crowdfunding success including masses of people participating and investing small sums of money in an easy and even fun experience are all missing from return-based crowdfunding. In other words, there is no crowd in return-based crowdfunding.
Reward-based crowdfunding (such as Kickstarter, Razoo, RocketHub and Indiegogo) is where crowdfunders receive a nonmonetary gain from their financial support. This reward can span the spectrum from the emotional reward of giving, to status in the crowdfunding community, to trinkets, to valuable physical goods and services. Reward-based crowdfunding is more mature than return-based. No monetary return means fewer restrictions. Currently, crowdfunding platform fees are hindering growth. It isn’t unusual for crowdfunding platforms to charge 6% to 12% of funds raised, between service and credit card fees. Regardless, this segment of crowdfunding is growing steadily both in number of sites and in funds raised.
One very interesting aspect of reward-based crowdfunding is pre-selling. For example, one reward-based crowdfunding approach is to basically sell the product in the pre-production stage. Say a company needs $1 million to build and release a product. It could offer a reward of one product for every $25 contributed. So, in effect, it is setting a $25 pre-order price for the first 40,000 units of product. This will be a consumer products funding model to watch as reward-based crowdfunding grows.
BTW, I purposefully left off a category that is often included in crowdfunding but I don’t consider crowdfunding. For example, Sally Peopleperson wants to raise $2000.00 dollars to send her daughter to Italy for a semester abroad experience. So she reaches out to her network on a site like Gofundme.com. This is less crowdfunding and more friendsandfamilyfunding. If you have a personal relationship with the crowd is it really a crowd? A little philosophy for you.
I obviously have not covered it all here but my writing and your reading attention span is not boundless. More details to come. I’ll be more regular in my posting now that I’ve completed an initial examination.
I’d love your comments, insights, broader view, etc. Help meeeee help youuuuu
Category: Crowdfunding Uncategorized Tags: Crowdfunding
by Anthony J. Bradley | April 4, 2014 | 14 Comments
Hello everyone. This is an alert to some research I have underway. I am looking at several of the leading crowdfunding platforms to assess the “state of crowdfunding” today. I am looking at the following crowdfunding sites:
- Early Shares
- Funders Club
- Lending Club
- Rock the post
I am over half way through and am seeing some interesting trends. I’m conducting a fundamental analysis against these factors:
Geography, Funding Type, Audience, Purpose, Experience, Adoption, Investing Model, Secondary Market, Business Model, and How it works.
I expect to post some results within weeks. So if you feel I am missing an important crowdfunding site or factor then please let me know.
Category: Crowdfunding Uncategorized Tags: Crowdfunding
by Anthony J. Bradley | September 19, 2013 | 2 Comments
This part 4 of an “Email is Anti-social” multipart blog. Here is Part 1, Part 2, and Part 3 .
Email is a personal productivity tool and it isn’t effective outside small-scale and simple collaboration. It is meant to serve the needs of individuals versus the needs of a community of participants. Each of us has our own email with our own version of content, with our own folders for organization and our own rules. By design, each of us can only view the contents of our own email. There is no transparency.
When talking about email versus social collaboration I had someone say to me, “Why are you trying to get me to use these new collaboration environments when I have spent the past 15 years honing my email kung fu. It is where I work. Why don’t you come to me rather than make me go somewhere else.”
My response was, “Because it’s not about you. It is about the community.” We talked earlier in Part 1 about the multiple versions and information fragmentation associated with email. Well imagine trying to invite somebody new into that effort how would they possibly be able to absorb all of that fragmentation and be able to productively contribute. It is like each of us is working separately on building the Star Wars interceptor with our own Lego versions, unique ways of categorizing those Legos, and different methods for working on them. And then as an afterthought we try to collaborate.
With social collaboration we not only establish that collaborative product as the center but also enable the whole community to more easily understand and contribute. It is a transparent and shared environment where people can view, contribute, and provide feedback to the entire effort. It is about community productivity .
Email is a fantastic communications tool and it also works just fine for simple collaboration where a few people are working on a basic and short-lived collaborative challenge like establishing an agenda for an upcoming meeting. However, I’m hoping at this point it is obvious that email is not well suited for deeper collaboration. In fact, it can be a significant barrier to more sophisticated, substantial and impactful collaboration. But moving away from email is difficult. For some it is almost an addiction. One they have no intention of abandoning. This is why we have seen some organizations pursuing “No Email” campaigns. It is an attempt to remove the barrier and force change.
Hopefully in this 4 part blog I’ve given you some ammunition in the fight to move all but simple collaboration out of email and into a more suitable environment for mass collaboration.
Category: Uncategorized Tags:
by Anthony J. Bradley | September 17, 2013 | Submit a Comment
This part 3 of an “Email is Anti-social” multipart blog. Here is Part 1 and Part 2.
Email is ephemeral. It is a continuous stream of loosely connected messages with a relatively short useful life. The efforts of collectively trying to advance a collaborative product gets lost in a seemingly never ending stream of short-lived messages. This nature of email drives an interrupt and reactive approach to work. Email is a multitasking nightmare with new distractions emerging by the minute.
I’ve gone into email to do something specific and then get caught up in email for 30 or more minutes. Extract myself to attend to something more productive. And then realize that I never actually did what I originally went into email to do. I doubt I am the only one that gets caught in that email multitasking trap.
Imagine that you are trying to contribute to the advancement of our Lego interceptor while constantly getting pelted by Legos from other Lego sets, sets you are not even involved in putting together. Email does not provide an environment where the collaborative product can exist as the focus of the efforts. Instead the effort is entangled in a morass of other efforts many of which you are not a part. With E-mail the participants are central and the purpose, the effort, is subservient.
Substantial work rarely happens in e-mail. It may happen in Word, Powerpoint, a F2F meeting or some other environment and then be distributed via e-mail. But email is the distribution channel not where the work is actually done.
Meaningful collaboration requires a more proactive focus. Social collaboration provides a dedicated space where the collaborative product is central and where we focus on it. When you go to Wikipedia you go there to create a Wikipedia article. It exists for that sole purpose with no distractions. The purpose, the collaborative product, is central and the participants are subservient.
This moving from the reactive to proactive requires a change in mindset, a more disciplined approach. Many of us have gotten used to, if not addicted to, checking e-mail regularly to see and react to what comes at us. Meaningful collaboration is different. It requires us to set some time aside and go to the collaboration product to contribute. It requires us to break free from the steady stream of interruptions, set priorities, and spend quality time contributing.
This is a change with which many people struggle. I sometimes do. Do you?
Please respond while I go check my e-mail.
Category: Uncategorized Tags:
by Anthony J. Bradley | September 3, 2013 | Submit a Comment
This part 2 of an “E-mail is Anti-social” multipart blog. Here is Part 1.
Email is a highly successful communication tool because it is a push centric message distribution mechanism. It is a poor collaboration tool because this distributed characteristic leads to information fragmentation even at small scale.
Let’s extend our lego thought expirament from part 1. Imagine if we try to assemble our Lego interceptor using email. Lets say that one of you distributed a copy of your Lego piece to the group with your ideas on how others could attach their pieces. Then just 20 people in the group picked up that email, took action on it, and then distributed the results of their work out to the rest of the group. Now there are 20 versions of initial attempts at assembling the interceptor. Now let’s say that each of those 20 versions was picked up and augmented by 20 people and they distributed their versions out to the group. Now we have 400 different versions of the evolving intercept.
This amplification is called the network effect. It is critical to realize that the network effect is destructive to collaboration when pursued through a distributed communication paradigm. This fragmentation makes it very difficult for original participants to follow even slightly robust collaborative efforts. And it makes it virtually impossible to add in new participants. You certainly can’t expect people to read through 400 or so versions to get a decent picture of the current state of collaboration.
In the new age of mass collaboration we do not distribute we collect. We collect around the collaborative product. We go to the collaborative product to contribute. We go to Facebook to contribute our profile and our friend connections to create the world’s largest social network. We go to Wikipedia to contribute our knowledge in the form of an article and tie it to other relevant articles. We go to YouTube to post our video and tag it so it becomes part of the larger repository. This is a common characteristic of social collaboration. The collaborative product is central.
In our Lego thought experiments we would all take our piece and go to a single place to contribute to the evolving interceptor. Unlike email distribution, the network effect is productive for collaboration when executed with a collective approach.
Category: social solutions Tags:
by Anthony J. Bradley | August 29, 2013 | 10 Comments
In many organizations the highly prolific, if not addictive, use of e-mail is considered an impediment to the adoption of social collaboration or other collaboration methods. People are resistant to use anything but e-mail and sometimes get very protective, sometimes hostile, when asked to use something different. How can you drive change and evolve into a more collaborative/social organization when you can’t get people off of e-mail?
At great risk, I am undertaking a multi-part “E-mail is Anti-social” blog effort to give you reasons why e-mail isn’t a good collaboration tool and to offer a few ways to motivate change.
Let’s start by busting the common misconception that communication and collaboration are the same. They are not. Collaboration is a higher form of communication. That is to say that communication is required for collaboration but not all communication is collaboration.
Communication is the exchange of information to achieve a better understanding.
Mass communication by its nature is highly distributed. The message is projected and received widely. The results of the communication is highly fragmented. It resides in the minds of each and every recipient. And absorption of that message can vary greatly including no absorption at all. This makes it very difficult to measure the success of mass communication.
Collaboration is different.
Collaboration is the exchange of information, and things, to advance the state of a collaborative product.
This product, this entity, this result of the collaborative effort is tangible and central. Everyone works to improve the collaborative product. We judge the success of our collaborative efforts by measuring the change of state of the collaborative product. This makes success much easier to measure.
To illuminate this difference let’s pursue a thought experiment using Legos. Let’s say 748 of us are collectively trying to build a Star Wars interceptor with Legos. Each of us has a Lego piece to this interceptor. If we were to work together to assemble this interceptor we would be collaborating. We would judge our success by measuring the accuracy and speed by which we were able to build this interceptor. The interceptor is the collaborative product we are trying to advance. I will continue to use this Lego thought experiment throughout the remainder of this multi-part blog.
It is ironic that our most ubiquitous collaboration tool, email, isn’t a very good collaboration tool. It is a highly successful communication tool. It has been so successful that it has become the default for IT based human interactions. Regardless of whether or not it is an effective tool for those interactions. In the next blogs I’ll examine a few of the primary characteristics that make it a great communication mechanism but a poor collaboration tool.
Ok, let’s hear your feedback. I’m sure some e-mail zealots out there are already fuming
Category: Uncategorized Tags:
by Anthony J. Bradley | April 8, 2013 | 6 Comments
Recently Gartner published a press release in anticipation of my participation in the Gartner Enterprise Architecture Summit conferences where I will be presenting the following:
Social Collaboration Demands a New Approach to Architecting Human-centric Solutions
Gartner Keynote: Driving New Business Outcomes With the Nexus of Forces
Unfortunately, several press outlets including Computerworld, and CIO Magazine picked up a misinterpretation of the press release stating, in various forms, that the overall success rate with social is 10%. This is neither the intended message of the press release nor the result of Gartner’s research.
The press release states, and our research shows, the “Provide and Pray” approach to social collaboration sees about a 10% success rate. The subtitle of the press release is, "Provide and Pray" Approach Has Just a 10 Percent Success Rate. It goes on to elaborate with the following. ”Without a well-crafted and compelling purpose, most social media initiatives will fail to deliver business value," said Anthony Bradley, group vice president at Gartner. "This provide and pray approach provides access to a social collaboration technology and prays something good comes of it, like a community forming and participants’ interactions naturally delivering business value. As a result, this approach sees a 10 percent success rate, and the underlying reason is usually that the organization did not provide a compelling cause around which a community could form and be motivated to provide their time and knowledge. In other words, purpose was lacking."
The overall message being, “Don’t take a ‘provide and pray’ approach to social collaboration. Instead focus on purpose.”
The methodology and initial data set is explained in the Gartner research report (only available to Gartner clients):
Employing Social Media for Business Impact: Key Collective Behavior Patterns
by Anthony J. Bradley Updated 12 July 2012 ID:G00173838
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