Supernova 2008 – Help ChangeThis

Welcome if you are an attendee or organiser of Supernova2008. 

This is a simple call to action. 

“One the key points in the history of brand management was the whole “Barbarians at the Gate” period, when the link between brand value and corporate valuations was established, touching off a wave of corporate deal making. Deals like Nabisco and Kraft commanded the headlines but the main outcome was the broad realization in global boardrooms that brands are a top priority. They require commitment, investment and special management methods.” – from the Canadian Marketing Association blog, Friday, June 13, 2008.

It is time to link social capital to corporate valuation. Social Capital Value Add is a management method designed to connect the pioneering intellectual enterprises of social capital and social network analysis to value based management and priorities of marketers.

It is designed to greet the challenges of the Network Age that you will be exploring at Supernova 2008 this week.

You can help usher in SCVA by supporting in until June 19 at www.changethis.com/proposals

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Ontario Government Please Invest in Global Links

I am not a doctor, but I play one on T.V.

That sort of covers my depth of analysis here. I am not an expert on how to make the VC ecosystem better, but about three months ago I had lunch with someone who is and we talked about the Ontario government’s approach.

A comment on a post over at http://www.startupnorth.com has turned into a post here because it is a good follow up to MESH, unMESH. Jonas’ points and Mark McQueen’s post both do a good job at covering the shortcomings of the Ontatrio government’s plan to resuscitate the local venture capital industry.

What’s that they say about doing the same thing over and over and expecting different results? Basically, this plan reinvests in the same players and doesn’t dedicate cash to domestic seed/venture startups.

I do not think that there is a shortage of entrepreneurial talent and energy. As some have pointed out, government regulation/programs/tax breaks are actually pretty good in Ontario. And while it is nice to see the Ontario government stepping in to address the VC crisis in this province, few authentic capitalists would argue that it is government’s job to be a venture capital market maker. Just get out of the way.

And if you are going to prime the pump with some cash, try to stimulate some competition and establish high value links to global VC markets instead of reinforcing the tightly bound social network that can sometimes stifle innovation (as I wrote about in the MESH, unMESH).

Here’s what I remember from that lunch. The nachos were good. Israel seemed to have come up with the model worth emulating and Peru has emulated it with some success.

In those cases, the government provided enough funds to convince top tier US venture firms to open a local office (with Americans contributing some matching funds). Typically a VC partner with a winning record opened the office. The startups received the value add of that experience, the experience of successful partners in the US and most importantly, a bridge into the US market for follow on rounds and marketing.

These foreign VC offices also eventually spun off talented VC partners into stand alone local firms and encouraged globally successful nationals to repatriate.

The effect was the development of a layer of global class venture capital partners and returns on investment that obliged institutional investors to open the flow of cash to the asset class. Ah-ha!

It is tough to message this kind strategy politically though. Who is going to lobby for and sing the praises for this kind of approach? Cash starved entrepeneurs who are too busy trying to get their idea off the ground? The TD Bank who just got a juicy management contract as a reward for sitting on the venture capital sidelines for years? The local VC firms who are the only game in town? Hmm … maybe this is a job for David Crow??

ONTARIO GOVERNMENT FUNDS U.S. VC FIRM TO COMPETE LOCALLY … not a very catch Globe & Mail headline if you are the Premier but it is probably the best job creation strategy possible.

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Privacy on social networks

What happens if the market comes to accept that social capital is directly linked to corporate valuation, as advocated by SCVA, and then FACEBOOK or a publicly traded company is found to be irresponsible with consumer data?

I believe that as the market factors social capital into stock price, the pressure will mount on companies to conform to transparent best practices regarding management of consumer data. The corporation will become more responsive and responsible in their relationship with their customers. The corporation will become more socially motivated. Where do we go from there???

Interesting story about how Facebook is accused of violating user trust in Canada.

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SCVA: Invitation to Great Minds!

Is There Value in Getting Involved?

This blog is an invitation to great minds from a rough and tumble practitioner of business. Criticize, collaborate, pontificate; choose your course, but please provoke the next step for this nagging collection of thoughts.  Shall we put them away and get back to the real (read: cynical) world or dedicate our life to them?

The basic idea is that a new form of social capital that is attributable to social media has emerged as a distinctive contributing factor to corporate valuation and this has changed the way business is practiced. It will change decisions that management makes and how investors choose to place their money. Over the last twenty five years markets have come to accept that the sexiest part of corporate valuation – the premium that acquirers are willing to pay over market trading value – is largely attributable to brand.

However, since Interbrand Corporation, a leading proponent of brand valuation technique since the late 1980s, began publishing its list of the world’s most valuable brands in 2001, two distinct groups of valuable brands can be observed in the top 100 – “broadcast made” brands and brand valuations that are “social network made” (this later category employing powerful network technology).

Great minds will ask: Is this distinction important? And if so, what valuation techniques should be employed to “social network made” companies vs. “broadcast made” brands?

 

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The Short Comings of Symbols

Symbols (like a brand) are valuable indicators. Some symbols tell us that the environment that businesses operate in has profoundly changed. Netscape is a good example. It is a symbol of great corporate value creation (and new risk) enabled by the introduction of the browser. The term Web 2.0 and the Facebook/Microsoft deal are symbols of the new environment that has emerged since mid-2004 when broadband over took dial up.

Examination and discussion of these symbols is the preoccupation of a lot of great bloggers. Who did what deal? What one ego said about another? The death pool mentality … that benefits from the energies of risk takers, but also may stifle some. It is too bad that Randal Graves was right, “There’s nothing more exhilarating than pointing out the shortcomings of others, is there?”.

Dwelling on the symbols can only take us so far in changing corporate management and dealing with the complexities of an “inflection point” for business that is the result of so many factors that challenge us in so many different ways.

Social Capital Value Add is designed to focus the attention and efforts of investors, managers and their agents beyond the symbols towards building out corporate social networks that are maximized for social capital.

Over the first 20 posts or so of this blog, we’ll introduce the SCVA argument with short pithy little gems like this.


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