Description

In Chapter 13 of 15, leadership philosopher and bootstrap business expert Bijoy Goswami shares the ying and yang of social capital and market capital.

Transcript

Erik Michielsen: How do market capital and social capital complement one another? Bijoy Goswami: I would first of all agree that they do complement each other, the yin of social capital and the yang of market capital in this journey. Social capital to me is what generates market capital and then market capital generates social capital in sort of in that way. Social capital keeps you close to the sources of innovation, keeps you on the ground. It lets you discover the new things. Market capital helps you instantiate that into products and services that people and customers can enjoy and participate in. So, in a way, the social capital is a generator of innovation and the market capital is the extractor of values that you know that you’ve actually made an innovation that people care about, is when they pay you with market capital. But then of course in order to -- you know, marketing capital then generates new problems, new issues, new challenges and put that back into social and then that -- you know, that goes back and you innovate the next version. You know things like Google are a great example of kind of this two for one, right. The social capital that Google gives is they organize the world’s information, they sort it out and they give you a free search engine. That’s social capital. You know they -- “Hey, go ahead.” They could say, “We want to charge you for that. We’re doing this very valuable thing. We should charge you for that.” But they instead kept that in the social capital realm. The place where they charge the market capital is on the top on the right, the people that want to be found by the people that are searching. So that’s the other thing, it’s what -- there’s a delicate relationship to be struck about where you’re creating social market. If you try to market capital, if Google said, “Hey, sorry, $10.00 a search.” That clearly wouldn’t work for lots of reasons. Maybe it would, we find out. But that -- using that particular moment to capture marketing capital is not the right moment. Erik Michielsen: Yeah. Bijoy Goswami: But once they figured it out, which took them five years to figure out, where do the market capital piece? They have this wonderful, social capital thing going, search engines that worked but they didn’t know where to press the button and make the money. So that’s this interesting thing of that relationship and to be careful about it because social capital is that golden goose in many ways. Social capital is the way you earn this loyalty, this brand, that’s the social capital piece. When you violate that is when things start to collapse and then your ability to extract the value in the market sense goes down as well.