A Literacy of the Imagination

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Filtering by Tag: participation

An Open Letter to Jamie Dimon

Dear Mr. Dimon:

Thank you for writing your recent piece entitled, The United States is still in an Extraordinarily Good Position.

It seems to have taken a page right out of your chat with Richard Haass at the Council on Foreign Relations event in October of last year.

I honestly can't say that I concur with many of the 'facts' stated in this article or the CFR conversation, but for the sake of a more constructive discourse, I commend you on your positivity, and will also say that you have made some very salient points about policy reform, regulatory dynamics, and even make an interesting case for 'market making'.

That said, you mentioned two critical things in the CFR talk which beg extensive exploration: collaboration and participation.

Let's assume for a moment that our debt woes can be managed, and that capital and liquidity can establish more stable foundations even in the most volatile (and seemingly unmanageable) markets like Greece or Spain. Let's say that China's systemic risk can be stabilized through its currency offsets (more like manipulations and swaps, but who's judging?), and that 'easing' can be achieved without having to print more fiat. Let's say that investments in emerging markets will include broader efforts to build infrastructure, schools, better technology, environmental solutions, etc. Let's say that America can benefit from all of this not only as an 'economy on the rebound' but also as a progenitor of innovations that drive growth and spawn alternative forms of credit, lending and investment, in addition to creating more jobs.

Perhaps the notion of 'free markets' can be revitalized, if not reinvented altogether. We can 'change the story', as you've alluded to in various interviews. If, per Joseph Campbell, metaphors are such catalysts for change, then perhaps we really are looking at a paradigmatic shift in the way the world operates, materially and euphamistically... and better yet, spiritually.

But all of this will require that banking itself changes.

Central banking, in particular, must change. Putting conspiracy theories aside, we would expect people like yourself to use their power and influence to force the hand of reform at the highest levels of economic hegemony. The protocol of banking is not so much the issue; to the contrary, investment banking is a prized discipline when used with better intentions, and was of course a key part in how this country (the U.S.) developed a market engine in the the first place. Central banking has experienced very empowered phases of existence, such as the systemic growth Canada went through in the 70s.

Yet we (the people) have been consistently let down by the calamities in trading, grand abuses of debt instruments (like derivatives) and grossly misrepresented notions of what happens when lenders and borrowers are essentially played against each other in a marketplace (call it collusion if you like). It seems that causality and correlation are confused for one another, or put into elusive positions, to which austerity measures take on polarizing perspectives. In other, more sensational and slightly horrific ways, they actually reorient the social fabric of geographies 'on the fringe'. (take, for example, the uptick of anti-semitic Zionists in parts of eastern Europe...).

Money, again, has often been a cause of the delusion of the multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper.
— Charles Mackay

So, as to the notion of collaboration and participation, the first best question seems to be: "Where exactly do we begin?"  or "Where can we pick up from where we've left the bag dry and open?"

As it seems you are of a more 'liberal' mindset (whatever that means these days), Paul Krugman's latest take on austerity brought forward a couplet that ties directly into the pairing of collaboration and participation: interdependence and ethos.

With a roll of the proverbial dice, let's begin there. 

You won't see much mention, if at all, of Iceland's turnaround in this regard (in which the country rewrote the constitution and did away with central banks). Nor do 'new' collaborative concepts grab headlines in the States, such as Nordic 'industrial symbiosis', or phenomena such as Bitcoin's abilities to collateralize and disintermediate currency inefficiencies (as was allegedly the case with the Mercado before Brazil turned itself around). Yet, the idea that we really can move away from a canonized system of doing business, making markets and mitigating risk is prescient, if not outright studious. And it is, after all, participatory.

As you already know quite well, canonization is the antithesis of global prosperity, whether that arises from a purely institutional benefit, or one that is more equitable to citizens and smaller market operators.  Perhaps the latter is the democracy you refer to in your interviews.

As Krugman quotes in his piece: "...How strong remains the urge to see economics as morality..." the same can be said for the potential of income equality and a real commitment to prosperity.

Please don't misinterpret this: The collective or universal moralism we must maintain is not something relegated to ideology (God knows we have plenty of that), but rather an appeal to the senses. In your world, this would constitute the bottom line.

This, of course, has little to do with making money (which, as you know, is relatively easy) and everything to do with building and sustaining markets of real value (which, as a practice, is quite difficult), as well as providing far greater access to opportunities in those markets.

These, Mr. Dimon, are the attributes you describe in your article: openness, transparency, authenticity, and most importantly, trust. Whether we decide to make war, or, whether we see an economic alternative in maintaining peace. Or both.

economic context in 21c.png

What catalyzes this shift is the willingness to sit at the table with stakeholders on the ground, the real market makers, not just majority shareholders with opaque corporate agendas. This is precisely where collaboration and participation take on a new reality. That reality settles in with new responsibilities and new challenges. Take, for example, the country of your ancestry, Greece, which is plunging into a fascist state as we speak, in part a by-product of predatory bankers and fiercely corruptible legislators. No democratic ideals or social dignities to be gleaned there. Surely this must bother you to no end.

I suspect, after all the self-inflicted pains, blame games and widespread political incompetence, you see a fiscal opportunity -- not a 'cliff' as it were -- that can trump all others in recent history.

I certainly hope that is the case, because I agree with you that we aren't asking the right questions to solve problems that are far more complex than what is fed to us through news feeds and opinion pieces.

With the best intent,

Gunther Sonnenfeld

Accelerating Human Growth Through Participation #K5Launch #startups #accelerators #venturecapital

Tom Taulli was kind enough to run a tiny piece on K5 this week in Forbes (thank you, Tom). I wanted to tell more of the full story of what we're up to here, because I am very proud - and also very humbled - by the work we're doing with the accelerator.

For starters, K5 is not your typical accelerator. There are a number reasons why this is the case, not the least of which is the fact that we approach the investment process in a very unique way.

On K5's differentiation:

It is no great surprise that the worlds of technology, investment, business and culture are converging. In some ways, they are colliding. We are transacting in an economy of relationships, and this challenges our notions of scale and scarcity. It means that the way we incubate, build and invest in businesses must take into account the dynamics of a flat world, one that puts the needs of people, and the markets in which they play, first. It also means that the way we invest must be reinvented through critical elements such as time, attention, goodwill and social relevance. In short, we need to make smarter, measured investments in human capital.

So here’s our charge:

1. To build a networked system that places collective import on participatory reward, with all the compensatory arrangements to boot (salaries, equity, etc.), but those that align investors, mentors and entrepreneurs to cultural values first and foremost;
2. To socialize that system in the form of both commercial and non-profit uses, such that innovation becomes as pervasive of a mindset as the decision to invest in the “latest and greatest startup”;
3. To grow this system as a platform as our name K5 suggests -- 1,000 companies (or projects) in 5 years -- in a manner that allows the system to grow its own independent systems nurturing ideas relevant to local markets, and to which those respective businesses flourish by the terms and conditions of those markets.

What we look for in a company...

First and foremost, great people. Every investor will tell you about the importance of great management and great company culture, but beyond that, we invest in the good intentions of entrepreneurs by helping them to understand how they can impact the world, and by helping them translate their intentions into businesses and markets of cultural scale. If a company exhibits that level of desire and that kind of ethos, we support it. If it starts with a good idea, even better.

It's simply not enough to accelerate an idea or a business for the purposes of positioning a company for an exit. We have to look at how that company fits into an ecosystem that can actually create change -- predicated on real market needs and values that are important to the average person.

The stages of the program...

Acceleration -- clinically defined as a process of moving an idea to the next level of business investment and formation -- is just one cog in our approach. It's a mechanism, not a solution. Without giving away our proprietary IP, it involves cultivating values that are tied to human development as they relate to the participation in an idea, and what comes out of that participation.

The values are many, and exist in varying degrees as the core to fundamental human business relationships, but are mainly these: trust, transparency, empowerment, connection, purpose, membership, exclusivity, accomplishment.

Connection and accomplishment, to our mind, represent the pillars of participation. And the primary mechanism for participating in a way that discovers talent unbound -- the outliers of our business and cultural circles -- that happens through experimentation. 

So, in short, our approach looks at how experimentation fosters individual and group growth, such that the investment in time and attention produces a return on hard (transactional) and soft (transformational) values.

Selecting candidates...

What we look for in an applicant are primarily the qualities openness and resilience. Openness allows someone to be receptive to direction, but also allows that person to want to participate, even if it is determined that his or her role might be different in the program or within the company going forward. Resilience is something that tends to show up in all entrepreneurs, but speaks to how someone can actually deal with adversity, how he or she can pivot to a new model, or how he or she can effectively manage people within the company.

The tendency of most accelerators and incubators is to think that if a candidate is given the right set of tools and the right amount of money, that he or she will succeed, but that's clearly not the case. A lot of candidates have experienced backgrounds, but we focus more on their aptitude for failure rather than their past achievements or accolades; it is critical that they understand how to fail forward because this process is about breaking down ideas and building them back up. This experience -- what we try to recreate in our process -- resembles the lifecycle of any successful business.

A bit more detail on our process...

Here's a graphic that encapsulates the nature of our process:

At the idea stage, essentially the entrepreneur is asked to "bare all"; he or she presents an idea in all of its merit as well as in all of its weakness. The way the candidate presents the idea actually speaks to his or her level of commitment, and how much he or she is willing to sacrifice for its betterment and that of the group. The way the group interacts around that idea starts to reveal its benefit, and the true characteristics of the team.

Then we enter a prototype stage; this can entail everything from coding a piece of software to developing an experimental model. When this happens, the group starts to coalesce and we see a learning dynamic take place amongst the members of the group. It's also a point at which group members start to make a stronger connection with each other, and with the mentors.

Once that happens, we can test the market. This could mean that the startup acquires a small group of beta testers and conducts a multivariate run on an application or a feature set. It also means that as users react and provide feedback, the roles within the group become more defined and refined in response to that feedback. The group starts to develop a sustainable, shared vision.

From there, the revenue and growth opportunities become clear -- and what we establish is a crucial relationship between what is being offered to the marketplace, and how that offering is being supported by a team that truly believes in the business idea. It also paves the way for membership in that business, and the values that each person exudes as an exclusive member of the business, and the K5 network. Essentially, meaningful participation affords you that privilege.

So, in sum, we go from the rejection of an idea, to an opportunity built around what's really possible.

All in all, we believe that company and individual growth must be symbiotic. Without it, startups are simply doomed for failure. And most of them do fail by design. We endeavor to buck that trend.