"Reputation Markets and the Future of Next-Generation Social Media"

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Glasp

Jul 03, 20235 min read

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"Reputation Markets and the Future of Next-Generation Social Media"

In today's world, social capital plays a crucial role in determining one's success and opportunities. For the wealthy, money may be easier to acquire, but building up social capital is a different story. Just like stocks, reputations have their own P/E ratios, which effectively measure the substantive value of something and the multiple above that it is evaluated at. CEOs like Elon Musk, who excel at building hype, have high P/E ratios that grant them advantages such as a cheap cost of capital, lower customer acquisition costs, and better recruiting pipelines. In essence, individuals with high P/E ratios earn social capital or knowledge at a rate far above their peers with lower ratios.

However, the concept of reputation markets is not without its flaws. It is possible to create a "reputation ponzi scheme" where individuals build up their reputation based on affiliations with other impressive people, without any tangible accomplishments to back it up. This creates a bubble in social capital, where more people are willing to vouch for others, leading to the funding of bad ideas. In a sense, it becomes a credit market for reputation rather than cash.

Furthermore, similar to financial banks, there are social capital "banks" that are willing to lend social capital to those who don't need it, while being unwilling to take risks on new and unproven individuals. Unlike financial markets, there is no global governing authority that can step in to regulate these reputation markets. It all happens locally, leading to inefficiencies in the system.

Recognizing these inefficiencies, it becomes imperative to find ways to incentivize social capital investing. One potential solution could be the development of an AngelList for social capital investing. This platform would allow individuals to invest their social capital in others, similar to how angel investors invest money in startups. P2P credentialing could be one approach to validate individuals' reputations and ensure that social capital is allocated efficiently.

Moving on to the topic of next-generation social media, it is important to understand what sets apart successful platforms like Snapchat, Instagram, and TikTok from others that fail to achieve the same level of growth. One key factor is the ability to quantifiably visualize our value. These successful platforms have addictive qualities that keep users coming back for more. However, apps like Poparazzi or Dispo lack this addictive factor because they remove or constrain the ability to quantifiably visualize our value.

Identity is at the core of social media. The concept of "accumulation" suggests that our identity is defined by everything we have done up until now. It is like having all the photos of our past experiences neatly compiled, representing who we are as individuals. However, instant expression through platforms like Poparazzi disrupts this notion of accumulation. Instant expression represents "the present me," the outcome of everything I have done up until now, but it does not encompass the entirety of my accumulated experiences. It is about living in the moment, not living within the confines of a mobile phone.

Successful social media platforms leverage distribution strategies to achieve widespread adoption. For example, Poparazzi utilized the pre-order system in app stores to generate buzz and attract half a million downloads upon its official release. Another recent example is the chat app Honk, which created a TikTok account to promote itself and achieved viral success. These strategies resonate with users because they offer positive or negative feedback loops. The desire for connections and the need to be truly seen and heard are disguised as "likes" or "hearts."

However, the ugly truth is that social media platforms often trap us in the unfortunate pattern of clicking and scrolling, and they are most effective when we crave it. We hold our identities in such high regard that it becomes difficult to believe in them. Social apps that rely on a certain number of friends, such as Poparazzi, may struggle to function beyond a certain threshold. It becomes less about who is tagging whom or who is hanging out with whom, and more about presenting oneself as private, authentic, and true to oneself.

The sharing of content becomes limited to what friends imagine you would want to share. The importance placed on one's identity varies depending on the context in which it appears. While Instagram may increase the pressure, platforms like Poparazzi, with their raw and unfiltered format, offer the opposite.

In conclusion, both reputation markets and next-generation social media platforms have their own challenges. To address the inefficiencies in reputation markets, we need to find ways to incentivize social capital investing and develop platforms that facilitate efficient allocation of social capital. As for next-generation social media, it is crucial to strike a balance between quantifying our value and fostering authentic connections.

Before we wrap up, here are three actionable pieces of advice:

  • 1. Foster genuine connections: Instead of focusing solely on accumulating likes or followers, prioritize building authentic relationships with others. Engage in meaningful conversations and support each other's endeavors.
  • 2. Embrace diversity: Expand your network beyond familiar circles and explore connections with individuals from different backgrounds and industries. Embracing diversity can lead to fresh perspectives and opportunities for growth.
  • 3. Be intentional with your online presence: Instead of simply sharing content for the sake of it, think about how you want to be perceived and the message you want to convey. Curate your online presence to align with your values and aspirations.

By understanding the challenges and opportunities presented by reputation markets and next-generation social media, we can navigate these landscapes more effectively and create a future that values both substance and meaningful connections.

Resource:

  1. "Reputation Markets", https://eriktorenberg.substack.com/p/reputation-markets?justPublished=true (Glasp)
  2. "パパラッチから考える次世代SNSのあり方", https://ishicoro.substack.com/p/sns (Glasp)

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