Archive for April, 2009

This blog post was written about 6 months ago and never published, while searching through old word documents I found it and felt it was the right time to publish it considering that Tara’s book is coming out April 21st. I have not read the book yet but for what I’ve read and conversed (specially on twitter) with Tara i must recommend this book as a must read for anyone interested in communities and social capital (which should be all of us).


With Tara Hunt’s book coming out soon (update: The Book is Already Out) , the social networks gaining users by millions every month and with communities becoming more close than ever, I thought it was accurate to mention some of the ancient forms of Whuffie and how they worked compared to now. Whuffie worked in the past, in some cultures is working right now and will definitely keep working in the future. The intention of this post is to show that The Whuffie factor has been key in some ancient systems and that it will be key in the coming years of this evolving system. Many other authors including Francis Fukuyama, Thomas Friendman and swedish Funksters Jonas Ridderstrale and Kjell Nordstrom predicted a change was coming. Today, brains are more important than capital, because brains attract it and therefore relationships between brains will lead to the creation of new things. Whuffie will be the currency that tells us with who we can collaborate and who can collaborate with us.

Today Whuffie is being defined as: 

“The sum of the reputation, influence, bridging capital and bonding capital, access to ideas and talent, access to resources, potential access to further resources, saved up favors, accomplishments (resumes, awards, articles, etc.) and the Whuffie of those who you have relationships with.”(Tara Hunt)

 I think it’s time to welcome this new phase of the economy with a little bit of background history on how it was and how we are going back to a similar organization.The Reputation based economy has been the goal, but we don’t realize that many of the ancient cultures worked with similar systems. Today we have the Internet to help us accelerate the process, and maybe an iPhone app will count how many Whuffie you have.The Incas were one of those cultures. They lived in the Andes for about 200 years until they were conquered by Fransisco Pizarro around 1535. But, their culture comes from way before as the Inca Empire was formed by various smaller cultures that were conquered by a big culture based in the Cuzco area. Their economic system was based in reciprocity and redistribution of goods. 

How the Incas built Whuffie

Inca’s organized themselves in families or ayllus. These were considered the unit in which the reciprocity system was based. A family will perform some activity in benefit of another and then this beneficiary  family will owe them the same amount of time and effort. This system was based only in time and effort and not in products or “stuff”. With “stuff ” I mean corn, potatoes, pottery or artifacts. Today that will be iPhones, cars and computers. The exchange of products was part of the redistribution system and this was done with the emperor or Inca. Since the Inca didn’t work because of his Holy condition all the people will give some work to the Inca and the product of this work was the Inca’s contribution to the system. Once all the contributions were done they were redistributed according to the amounts given by each family. But, also the Inca didn’t worked because he was busy organizing and running the system, so politicians get this benefit as long as they make the system work. And I mean actually work! People will decide what is good or bad for them by giving good or bad reputation to the work of the other person. Politicians or lawmakers could be elected by the amount of Whuffie they had. In fact, this was not present in Inca society but it could be a great development.

So basically with the Inca economic system you had only as you worked for. There was no “riches” or capital as all of this was owned either by the state or the whole family. So if you worked better and faster and for longer you will have more people owe you some work. And when you needed something a person with the right skills from the beneficiary family will do it for you. (Isn’t that perfect I paint your wall and you help me plant my potatoes or give me some advice).

The Incas had no currency, they just had this very rudimentary instrument to record numbers which may have been hours worked by some family in favor of another or hours worked in favor of the Inca. So this was the currency.(There is still not certainty about this theory). This is where the Whuffie Counter iPhone app will kick in.

Now, we are in a economic system that is being ruled by whuffie. Whuffie is not the main currency yet, but it is taking an important place, specially in highly connected communities where people collaborate with each other every day. Your reputation is based on your accomplishments, so if you are a very good video editor or marketing specialist people will call you for you to use this skills on their favor (provided they did the same effort by putting their talents work for you). This will be reciprocity explained the Incas had. You  perform one hour in a Talk and then all the people benefiting with it will owe you an hour,or a fraction of an hour, of any other job you may need (like painting your house or taking the dog for a walk). Your Whuffie is based on how much you can contribute with other people and to the community in general. 

There is one more thing that Whuffie is and that was present in the Inca economy.Each family, according to the position of their land and the resources they had, produced a different product or had different tools to perform certain jobs. This will be the “access to resources, potential access to further resources”, you will be know as a rich family if you had many members. Since the unit was worked hours the more sons and daughters you had the most hours of work you could offer and the most work you could get done for you by others. Accumulated favors where the ones that permitted you to ask for help in building a house or a farm, so you accumulated them for when you needed them and you could achieve a bigger project. Today opposite to having lot’s of family members you will need to have lot’s of skills and many areas of expertise, or one good area where you can be excellent. For example, you need to be a marketing specialist, a good public speaker, a technology adviser, a good writer, etc. This many ways guarantee that you can build whuffie fast and at all times. 

The Next Economy or the Whuffie Based Economy

Cory Doctorow came with this idea of a “future” civilization working with Whuffie (again). Well, this was no future, in fact seems we are getting back to the basic form of economy the Incas used. Of course that there are lots of differences. The Incas were not exposed to 500 years of capitalist development as we have been and today, to get any kind of good you need to have money available either as cash or in your bank account. Unless you have some Whuffie (the reputation part) and companies will give you products to try so you can refer them to your numerous contacts. For services, sometimes you need the money and sometimes Whuffie will be more than enough. (Though i may be wrong here and you could use Whuffie to get some products too).

Reciprocity then it’s just like the Incas with only one difference. In the Inca’s time you could accumulate more “whuffie” or “inca whuffie” if you had a numerous family. But in today’s individualized society you rely on your talent, know-how and contacts (mainly in the form of having resources available). So today to have more Whuffie you need to perform a valuable service or job, know some scarce skill or be able to put together a non-easy to do combination of resources. Or as stated lines above have multiple skills.

So the conclusion is that we are going back to a old system that worked really well for the people in it. Since the Incas had many wars all the conquered cultures were forced to accept the system and, hence, lost some of their properties at first, but once integrated to the system the populations inside had peace between them and had plenty of resources to survive. Right now if you are talented, helpful, intelligent and have accomplished lots you are one of the Rich persons (talking in Inca terms). And right now we don’t need wars to get more people in the system, the idea that whuffie is necessary will make people look for way to integrate and collaborate.

Punishment.

Nowadays in this Whuffie system if you don’t give back a favor or if you lose your reputation because of receiving money to promote something that you don’t believe in. The punishment is that no one will listen to you or make you any kind of favor so you can “cash out” your Whuffie.  In the Inca’s time you were expelled from the  family and this meant that you where automatically poor because you only had your work to give and that was returned to you, if anybody needed that. Usually people wouldn’t take work from a single person because the things he was able to perform were limited.

Motivation

In Doctorow’s definition of Whuffie he says that it is the source of motivation to do work for others so you can receive back the same amount of effort. This motivation is for making only work that helps the community and that is really useful, since the community is the one that rates it as good or bad. This is a high improvement to the capitalism ubber älles system that was reining mainly in the 20th century. The reason is that for example we feel that transgenic foods or abusive use of petrol are bad we will rate the makers of this products as bad, and they will have no Whuffie so they will not be motivated to create this harmful products. In the Inca economy you needed to do what others asked for, so if there was a consensus on the harmfulness of certain activity it would be not performed in the community. This characteristic of the Whuffie and Inca systems is very important because if we were going to live in a Whuffie system any form of illegal activity will be avoided because it will reduce your reputation and you will not have access to any other service or product you may need.

However nowadays in this money based economy we still have people producing this harmful products and services because there is no community to stop them and because people accept what is imposed by big corporations because they still have the image of “power” or the need for their products. Gladly communities are beginning to understand that corporations and governments have Whuffie too and they are making protests or stop consuming products they believe are harmful for their healths (mental and physical) or the planet. There are lot’s of sustainable organic food associations making increasing sales with socially responsible products that assure the well being of the producers in developing countries.

Doctorow’s idea of a future civilization are not that crazy, we are heading there and in some cultures we come from them. Now we need to adapt them to a global status and that may take time. But, Whuffie will be king, maybe not immediately, but remember Tara Hunt’s words “it is getting harder to eat without it”.

This means that maybe the Whuffie economy is the real deal. Maybe humans were made to work in a Whuffie economy and if we seek in pure capitalist theory a perfect market should be working on Whuffie because money is no longer a motivation since all companies make no profit at all. Authors such as Kjell Nordstrom and Jonas Ridderstrale said Karl Marx was right, that finally the power was going to the people, but in other form and with other process. I think Whuffie supports this theory since we’ve seen the Incas working in a culture where there was trade without people being richer or poorer than others. They had larger families so they could offer and get more work done, but they also had to feed more people. Talking about nowadays we see that suddenly people are becoming the main key in competition as resources are becoming “plain vanilla” the only thing left is Know-How, creativity and contacts and finally companies lose power to the people forming them. So that is the revolution of the working class. But if we are going to live in a Whuffie economy we should start teaming up in communities (like the ayllu of the Incas) in order to get the best experience out of it.

And then this communities will get richer in comparison with the ones that are not collaborating. The new Whuffie system will be based on the impact you make in the world.

So what does this means: Whether you are a business or a person you need to start serving the community and caring about them, because that is the only way you will succeed and built the components that will raise your Whuffie and if you do good to people, they will do good to you.

The Whuffie definition was extracted from a post by Tara Hunt and some of the concepts from Cory Doctorow’s book.

Starting Up

For the next year I’ll be involved in launching two projects for startup businesses one in the web market and other one in the Education market with a huge potential of evolving into a webapp.

I think it’s a good idea to blog all my startup advances to share it with  people that have ideas and want to turn them into reality. 

The first step I’m taking is implementing a business plan model so we can have a guide of where we are going. Many people say business plans suck, and sometimes you don’t need them. That’s true, but it gives you a guide of where to go and focuses your resources and capabilities on the market you want and helps you be aware of the potential threats that may come in the near future.

Today we started by establishing our values and what we wante from the business, we came up with a mission statement and values that will lead the effort we are making. Then we proceeded to establish the resources we have, the ones we lack and did the same thing with the capabilities.

We endend the meeting as all this took us almost 4 hours, we will meet again next week and hopefully finish a SWOT analysis that will lead to determine a possible competitive advantage.

Next week I will post the second part of this planning meetings.

In the mean time I have a few questions.

What was your start up process?

Do you like to  use business plans or what do you use?