Connect with us

Money

The Financialization of Life

Published

on

A recent article about the BlockChain appeared on the Italian version of Vice’s Motherboard and raised a series of interesting conversations, and was soon followed up by another one.

In that article I was called to express a series of opinions about what was happening with BlockChains and cryptocurrencies, from the point of view of an organization such as the one I lead (HER, Human Ecosystems Relazioni), which deals with data, complex connections between sciences, technology, society, design and art, and the social, political, cultural and psychological implications of these connections and interactions.

In my job, everyday, I deal with multiple points of view which confront with these impacts brought on by data, blockchains and cryptocurrencies, with a wide variety of subjects from hyper-technical ones, to entrepreneurs and investors, to policymakers, up to the ones beyond suspicion, “ordinary” people who have to understand what an artwork which uses the blockchain does, or who deals with culture, museums, the city’s neighborhoods. People who — whether they like it or not — have to do with these technologies and practices. A large variety.

I have the maximum respect for the blockchain. It possibly is the technology which bears the highest potential for radical innovation and transformation today. With all its limits and problems.

My critique is not technical, but psychological.

It moves across the domain of perception and of comprehension of reality.

In this domain — the one of the psychic processes which are engaged and shared by people and their relations as they interpret the world to understand how to orient themselves and how to act in it — technologies like the Blockchain are a disaster.

Why?

On the one hand, they are a very powerful agent towards the transactionalization of life, that is of the fact that all the elements of our lives are progressively turning into transactions.

Which overlaps with the fact that they become “financialized”. Everything, including our relations and emotions, progressively becomes transactionalized/financialized, and the Blockchain represent an apex of this tendency. This is already becoming a problem for informality, for the possibility of transgression, for the normation and normalization of conflicts and, thus, in prospect, for our liberties and fundamental rights, and for our possibility to perceive them (because we are talking about psychological effects).

On the other hand, they move attention onto the algorithm, on the system, on the framework. Instead of supporting and maintaining the necessity and culture of establishing co-responsibility between human beings, these systems include “trust” in procedural ways. In ways which are technical. Thus, the necessity for trust (and, thus, on the responsibility to attribute trust, based on human relations) progressively disappears.

Therefore, together with it, society disappears. Society as actively and consciously built by people who freely decide if and when to trust each other, and who collectively agree to the modalities of this attribution.

What remains is only consumption of services and products. Safe, transparent and all. But mere transactionalized consumption. Society ends, and so does citizenship: we become citizen of nothing, of the network, of the algorithm.

These are not technical issues, but psychological ones, perceptive ones. And, thus, even more serious.

Technology is not neutral.

I can use a hammer to plant a nail or to smash it on your head, that’s true. But what is also true is that as soon as I have a hammer in my hand, everything starts looking like a nail.

This is the same for Blockchains. As soon as I start using them, as soon as I start imagining the world through them, everything starts looking as a transaction, as something which is “tokenizable”. And this is a disaster, in the ancient sense of the word (dis-aster, without stars for orientation).

Technology creates us just as much as we create technology.

We are starting to design systems which are, on the one hand, completely open and transparent. Which is a good thing from one point of view, and a problematic thing to do on the other. (unless the complete transparency of “The Circle” scenarios is something we feel comfortable with).

From another point of view, these systems are progressively being associated to identity systems, meaning that all the advantages and freedoms deriving from the fact that digital identity is anything but univocal and fixed are progressively being lost. Byebye anonymous, temporary, shared, multiple, plural, identities. Goodbye all the freedoms that come with them.

What derives are “citizenship” sytems (not “existence”, not “inhabitantship”) which are literally trustless, “without the need for trust”, in which trust is in the peer-to-peer network, in the automation, in the algorithm.

Institutions and other people disappear, replaced by an algorithm. Who knows where trust is at/in! It is everywhere, diffused, in the peer-to-peer network. Which means that it’s nowhere, and in nobody.

In a weird way it is like in call centers: they are not really useful for the client, and they completely serve the purpose minimizing bother for the companies, letting clients slipping into the “procedure” (which is synonym with algorithm), and avoiding them from obtaining real answers and effects, in their own terms outside of procedures.

These are all processes which separate people from each other, from institutions, organizations, companies, through the Procedure.

Citizens of everywhere. Citizens of nowhere and nothing.

From a philosophical and psychological point of view it corresponds to a powerful addition to a process which is already taking place on a large scale: the transactionalisation of life.

Everything is turning into a transaction: our relationships, emotions and expressions; our ways of producing, acquiring and transferring knowledge; communication; everything.

As soon as each of these things become the subject of a service, they become transactions: they become an atomic part of a procedure.

Because this is what a transaction is: an atom in a procedure, in an algorithm. This includes the fact that transactions are designed, according to a certain business, operational, strategic, marketing model.

This means that when our relationships, emotions, expressions, knowledge, communication and everything become transactions, they also become atoms of those business models whose forms, allowances, degrees of freedoms and liberty are established by those models.

With the Internet of Things these processes also arrive to the objects which fill our daily lives, to the elements of the environment and to the environment itself.

This means that we will be surrounded by transactions, within ourselves and in everything around us. It will become truly difficult to think of something that does not correspond to a transaction.

As said above: this will bring on issues for informality, the possibility for transgression and for our freedoms and rights.

Many of these these will simply disappear, as we lose capacity to conceive them outside of the “procedure”, of the transaction that embodies them. Whether it is purchase or an emotional expression, it will not make any difference.

Furthermore, speaking of transactionalization and its equivalent, financialization, the issue of access will also arise from the fact that there will be a limited amount of subjects who will have the resources to sustain the cost of the transactions which are needed to have rights and freedoms, or to pull themselves out of the procedures themselves. And of course there will be people who don’t have these resources.

These reflections have long been outside of the discussions which are going on about these new technologies. Hackers, activists, researchers, philosophers, antropologists are talking about the blockchain, as well as governments, organizations, companies and banks themselves. Yet none of these doubts are yet on agendas. There is a mono, singular narrative, which is interpreted for activism, business, governance, exploitation.

Investments, from above (with governments, financial institutions, investors) and below (with crowd based operations, evangelism, activism and also with the desire to exploit and to access funds and resources, to abandon the state of crisis) are happening.

And yet we must consider.

The Blockchain is the first tentative answer in years to the extremely centralized models which are de facto ruling us today, whether we talk about energy, environment, finance, welfare, governance.

The Blockchain is all about distribution of power.

And yet, this same distribution is its weak spot, if our objective is to collectively create a society with more freedoms, solidarity and opportunities for relation, emotion, communication and knowledge.

Because this distribution of power does not require conscience and desire, and the responsibility of these conscience and desire. Because these are in the algorithm, not in ourselves and in our relations.

It is not the algorithm serving us, and what we want. It is the algorithm turing us into itself, making us become like it.

What can we do?

The most important thing we can do is, probably, that we need to realize that these are not technological or technical issues.

Design only arrives up to a certain point. The design and production of services, products and instruments does not address a class of issues which are aesthetic, psychological and which deal with sensibility and imagination.

For example, in our practice we often talk about the Third Infoscape, which is originated from the concept of the Third Landscape.

As in the Third Landscape: where “technicians” see “weeds”, the Third Landscape sees opportunity, biodiversity, an open source media which is a reservoir for the future of the planet, which does not require energy to maintain, but produces energy, food, knowledge, relations.

As Marco Casagrande describes, the entire territory becomes a form of knowledge, with all its conflicts, dissonances and polyphonies. This is not a transactional (or transactionalizing) vision. It is a thing in which data and information are not laid out geometrically, formally, as in gardens, but more like the woods and wild nature, in which multiple forms of dimensions, boundaries, layers and interpretations co-exist by complex desire, relation and interaction, not by design.

It is a different kind of technology, a different kind of science, with a different imagination to support it.

The Third Infoscape, just as the Third Landscape, is not a matter of technology or technique. It is a question of sensibility, of imagination and of aesthetics.

The problem? It is current science and data. Which we are now using as something absolute and immutable. As a society, we are now using Science and Data like once we used Religion and Magic.

The Blockchain is one direct effect of this.

It is the procedure that “liberates” us from trust, from having to trust, from having to trust others. It compels you to trust, because it is the algorithm itself which embodies trust. And, by doing that, by forcing you to become like it, transforms all into a transaction.

To make trust exist, it transforms all into itself.

We need a change in sensibility and imagination, not disruptive services.

_____________________________________________

About the Author

This article was written by Salvatore Iaconesi, founder at Art is Open Source, Human Ecosystems and Nefula. Remixing the world through ubiquitous technologies.

Entrepreneurship

Do Aesthetics Matter?

Published

on

Asa product designer, sometimes I question how important beauty is when it comes to software.

Look at this list of some of the most popular websites on the Internet:

  • Craigslist
  • Reddit
  • Hacker News
  • Wikipedia
  • Drudge Report

These sites have little to no aesthetic appeal, but collectively they are visited by tens of millions people every day.

So I ask myself…

Are we just showing off our design skills to other designers? Does the average consumer notice? Do aesthetics have a direct impact on revenue?

These are questions worth answering.

“No, Aesthetics Don’t Matter!”

Some would point to the above examples (and more) to make the case that beauty is irrelevant. They’d say visual design is mostly un-measurable mushy marketing.

After all, software is a tool. We use it to accomplish tasks like communicating, writing, checking off a to-do, or socializing with a friend.

Giving the user the ability to perform a unique task is far more important than making it look good.

We jump on Wikipedia because it’s easy to get free encyclopedic information. We pull up Craigslist because we want to buy or sell something locally without having to pay for it. We visit Reddit for its distinctive take.

It doesn’t matter that these sites are ugly because they’re the best tools for their specific job.

In fact, part of the popularity of these sites has become their ugliness. It’s as if the user base is saying, “We just laugh at how ugly Reddit/Drudge Report/Hacker News is because we get quite a lot of utility from it, and that’s what matters most.”

You can’t build a valueless product, throw some eye-appeal on it, and expect it to last.

The ever-stunning rain poncho. Source

Take a rain poncho. This is an incredibly ugly piece of clothing. But millions of them are sold every year because they’re really good at their job — keeping you dry.

“Yes, Aesthetics Do Matter!”

Others say beauty is critically important.

stripe.com

For companies trying to build or sustain a brand, visual design matters because it’s part of the package. People recognize Stripe, for example, in part because of their stand-out aesthetics. Paul Rand said:

“Design is the silent ambassador of your brand.”

Something beautiful is also pleasing to use. And pleased customers keep coming back. It’s a piece (however small) of user experience.

When something is beautiful, you can feel that there was some thought put into its creation. That makes it feel professional and gives it an air of having been built on purpose — a feeling that whoever created this thought about you, the user, as they made it. When the opposite is true, it feels like someone just hacked it together.

Those sites mentioned above — Craigslist, Reddit, etc. — those are the exception. They’re popular in spite of being ugly because they were first to market and have an entrenched user base. For those of us building something new, there’s no reason to purposefully forgo aesthetics.

Think back a decade ago to when the very first iPhone came out. The usability and utility were there in abundance, to be sure. But people were also astounded by how beautiful it was. No other phone looked like that. Many people were (and still are) willing to pay an astronomical price for it, in large part because of that beauty.

My Takeaways

Which side are you on?

I don’t think it’s black and white. It’s a matter of priorities.

“Form follows function.” Function certainly comes first, but that doesn’t mean form is nonexistent.

To me, the priority goes like this:

  1. Utility. Does your software help the consumer perform a unique task in a distinctive way? If it doesn’t, the heart of your software is missing and it will eventually die. Who wants a tool that doesn’t help you accomplish something?
  2. Usability. Do you get out of their way so they can execute that task easily and intuitively? Is it reliable, speedy, organized?
  3. Aesthetics. Is it attractive in a way that contributes to utility and usability?

By all means, add beauty. Beauty is wonderful. But utility and usability come first because that’s why people are there in the first place. Build around the purpose, then add aesthetics on top of that.

Your user will thank you for it.

________________________________________________

About the Author

This article was produced by Jordan Bowman of HackerNoon. see more.

Continue Reading

Experience

5 Important Reasons Not to Raise Capital for Your Startup

Published

on

I recently had dinner with co-founders of a startup who’d just raised quite a bit of money for their company, a deal which incidentally I’d passed on. The meal was fantastic: fresh salmon from the bay, washed down with a particularly good New Zealand pinot noir, while watching the sun go down over the water. Really you’d expect my mood to have been chipper… but it wasn’t.

The evening was spent with the founders congratulating themselves for raising money. I’m not being a killjoy but it felt like the end of the line, not the beginning. It felt like all the preparation had been done, all the work completed, all the sweat, tears and marriage breakups had already been had, and now finally they’d succeeded. Except of course that wasn’t the case. This was the beginning not the end.

All they’d done was raise some money. Money which, though it may be needed to fulfill their goals, stands as a liability. Now, I’m all for celebrating success but this attitude really worries me and here’s why.

VC culture has come to equate raising capital with success, where each successive round of financing successfully completed is denoted as success,but you know what, VC culture is wrong.

Success is success and raising money is raising money. Let’s not confuse the two.

Raising money amounts to taking someone’s hard-earned capital. Capital which has been acquired by sweat, savings, maybe even theft but it’s someone else’s nevertheless. That, folks, is a liability no matter which way you spin it!

Realise that even if the capital never came with strings such as board seats, preferred equity, liquidation preferences or any host of other typical “strings”, realise that capital ALWAYS comes with strings which I’ll get to shortly.

So in the event that you’re an entrepreneur, emboldened by the fact that most anyone in Silicon Valley today sporting a hoodie, some pimples, and professing to work out of his grandmother’s garage, can get funded and at eye-watering valuations, let me give you 5 reasons why raising money may be a bad idea for your business:

1. Lack of Focus

Multi tasking is rarely a great strategy for any business. If you doubt me, try rubbing your belly and patting your head.

37signals built one of the most successful businesses in their niche by remaining extremely focused on just one product. My point is that it’s next to impossible to be running around raising capital, while remaining focused on building your fledgling business.

Unless you’re sitting in Silicon Valley which stands as a distinct anomaly to the rest of the world, let me assure that raising money will likely take you far longer than you ever thought, will come with more distractions than you’ve even thought, and the progress in your business will suffer.

2. ROI Can Be Poor

Time has a cost. The time spent raising money can often be time poorly spent.

I little while ago I was pitched by a company which had developed a minimum viable product, cheap to produce, easily shipped and which when sold, netted a $10,000 profit. The founders were, however, trying to raise $250,000 and had been on a road show for 3 months already!

Consider that by focusing on building, marketing and selling that very product they needed only 25 products sold to reach their $250,000 they had spent the last 3 months raising. The sheer insanity of what they were doing forever precluded any investment.

3. It Can Be Expensive

Further to the above, as an entrepreneur you might consider paying brokers to raise you capital. While this is an option realise that in any financing round up to Series A, it’s not uncommon to have to pay up to 15% of capital raised, and sometimes even include some warrants, preferred stock or options.

In short, it’s expensive money. Really expensive.

4. Capital Comes with Strings

You should expect that incoming investors may want board seats and input in your company. Do you want that? Does the capital you’re looking for come with the kind of strings you are comfortable with?

You can take money from all sorts of sources.

  • Family and friends will invest because they like you, or maybe they hate you and want you to go away. Or they feel guilty and can’t bare the thought of the next thanksgiving dinner where they’re the only family member who haven’t backed your idea and aunt Marge will make a stink about it. These are psychological strings. Are you OK with them?
  • Angels will invest if they believe you’ve got a good chance at success and often, if they feel they can, add some personal expertise. These guys are not stupid though, and will likely structure deal terms including ratchets, liquidation preferences and so forth. Strings may be that the input by the angel(s) is not something you want. These guys can be of immense value but make sure interests and personalities are aligned otherwise you risk a lot of strife.
  • And venture capital comes with a set of different strings. This particular avenue of financing deserves an article in itself and I’ll write about it next week.

5. Too Much Capital Can Actually Be a Bad Thing

I’ve seen good ideas go to the wind when founders raise too much money. Money can certainly make people do daft things and I’ve learned that as well.

The fancy office space suddenly becomes “necessary”. Scrappy goes out the window in favour of “professional”.

You want to know what is really professional? A company that manages its cash flows, is scrappy as hell, is intensely, manically focused on building awesome value, and realises that when markets turn, as they always do, it’s the strong that survive and thrive. And the strong are always scrappy.

Make sure the money is aligned with your outcomes. Understand who you’re dealing with and what the motivations are. Most of all, don’t just follow the herd because the herd is rarely right.

If, after reading this, you’re not scared away and believe that your company has world changing potential, is less than $10M pre-money valuation and “needs to exist” then feel free to contact me. I’ll be happy to look at your pitch. I’ll almost certainly say no and be kind about it but maybe, just maybe that doesn’t take place.

____________________________________________

About the Author

This article was written by Chris of of capitalistexploits.at.

Continue Reading

Trending