how crowd-investing just might save the middle class
all my life, i’ve been formulating theories – theories about life or the industry or politics or market forces. i generate these theories in the dozens – i’m sure most people do, but so often i find myself obsessing over some concept or current event that in some way reminds of an event in history or some semi-related thing in nature. i see these similarities or differences or whatever and can’t help but make predictions, projections or guesses about the way something might turn out. i can’t help it. i’ve always had one foot in the past and one in the future, trying to see the patterns.
something that happens all the time is that i’ll have a thought bubbling around in the back of my mind for weeks or even months, and then one day out of the blue, it will all come into focus. well a few days ago some concept that’s been bouncing around in the back of my mind for months came into sharp focus. it’s about crowd-investing, which was what i was talking about in a much more general sense during the Geek’s Grotto in episode 17 of WMM Film Geeks (the key portion of the We Make Movies’ Film Geeks podcast i do weekly with Garrett Robinson).
now before i get into this theory, allow me to concede that even though i call it a “theory”, the means whereby i’ve actually developed it are entirely unscientific … but i still believe them. i’ve been correct regarding events like this enough times in my life to trust my instincts. so it’s not a theory as much as a hunch. mind you, even if my hunch is correct in the sense that people in general will start to do what i predict, there are still monied interests that could lose serious profits and power if i am correct, and these interests aren’t likely to just sit back and let this all happen as it starts to unfold. however there are a variety of scenarios – i believe likely scenarios – in which the middle class could absolutely begin to be benefit financially in many of the same ways, and for many of the same reasons, which currently only the most successful corporations and corporate executives currently benefit.
before we even get into the theory itself, the first thing you need to recognize is that the highest income individuals in our country have been seeing an increase of wealth way out of proportion to that of individuals further down the economic food chain. for instance according to a recent study released by the Pew Research Center between 2009 and 2011, the wealthiest 7% of the households in our country saw an increase in net worth of nearly 30%, while the other 93% of us saw a decrease of 4%. and another recent report from the Brookings Tax Policy Center shows that larger and larger portions of a person’s income comes from investments the higher up the income scale they exist. for instance for the top .1% of Americans, an average of 35% of their income comes from investments and 22% from business, whereas at the lowest end of the spectrum less than 3% comes from investments and 5% from business.
well, the known key to this portion of the jobs bill is that it will lower the bar for investing – to loosen regulations that currently scare away smaller money investments and solicitation for small money investments. so obviously savvy, but less liquid members of the middle class will be able to invest more in products that they know well, but here’s the part that i believe will make all the difference.
i foresee a kind of natural gravitation towards what i call small economic ecosystems – small groups of artists, artisans and/or designers partnered with their own hard-core fans who are also likely to become their most reliable investors. money will in many ways circulate just within these ecosystems.
let me give you one kind of example. last year a new company called HairBrained Schemes tried to raise $400,000 to build it’s video-game ShadowRun Returns. in their short-lived campaign they ended up generating $1.8 million instead! now that same company is trying to raise $500k to develop what looks like it’s going to be a really fun game called Golem Arcana, and only one day in they had already made over 20% of that target. that progress has leveled off a bit, but they’re still well over 25% in at 2 days with 31 days still left in the campaign.
now imagine if those same fans were instead given the opportunity to buy actual shares in Harebrained Schemes, or in either of these two products, the success of those products could be shared with those fans – some of whom might actually be interested in giving even more and potentially reaping even higher dividends. so if you can see how people who currently gravitate together over certain hobbies and interests might if given the opportunity become financially connected to those same interests, then you might be able to see why this interests me.
so more on this later, but for now ponder this: these niches that everybody’s talking about nowadays could develop mini-economies within themselves and that’s where things could really get interesting.