The emergence of dynamic ownership

Reddit’s CEO, Yishan Wong (formerly of Facebook) is doing the right thing. He’s planning to make Reddit’s users into owners, depending on their contribution to the site. There’s a way to create a form of liquid ownership that doesn’t require Wall Street. This new method is based on the bitcoin blockchain. That technology makes it possible to issue ownership to contributors in a decentralized and trusted way. The combination of blockchain stock, Yishan’s example, and the experience of participants will set in motion a wave of change in Silicon Valley. The message is: if you want to build an online company, you better find a way to make your customers/contributors owners.*

Excerpted from John Robb:

“Yesterday I wrote about how Reddit’s CEO, Yishan Wong, is planning to issue ownership in Reddit to the users of its site.

It’s a bold move that has a level fairness and integrity we don’t expect from business leaders anymore.

It’s fair because these users are the same people that put the time and effort into making Reddit a great site to visit, and they’ve been doing it for years.

So, why is this going to change everything? It’s the start of something called dynamic ownership.

It’s going to end the free ride Internet companies have had for the last two decades. Companies that are exceedingly profitable because they don’t pay the people that do the work they make money selling.

Once people learn to expect ownership for the work they do online, few will spend time on sites that don’t award it.

Here’s an example.

Let’s say I start a challenger to Yelp. My goal is to build a site that has higher quality reviews, written by verified customers. It’s a win win.

Normally, Yelp would be hard to unseat. They have lots of existing content and people are used to using them. However, they don’t reward reviewers/users with ownership. I do.

So, I start by crowdfunding the venture.

How? I build a prototype site and demo it on Kickstarter (or some site like it).

I then offer the initial group two million shares at a dollar a share, using a loophole in the law that avoids triggering a public offering. Ownership is awarded to this group in the form of a corporate coin like bitcoin.

When I launch the site, reviewers and site users earn ownership (coin) as they contribute to the site drawing from a different pool of stock that uses the same loophole.

Soon, millions of reviews are up and the site is humming. Yelp’s traffic plummets as my revenue shoots to the moon (and given that the system is built in “the cloud” and the ads are run through third parties, the costs of the system are nearly zilch relative to revenue).

It’s not long before the people working on sites like this are able to earn a living from the money they earn this way.

When this happens, we’ll know that this new economy has found a way beyond the silly commercial malware and billionaires in hoodies it produces today.”

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