In February 2011, I have the privilege to speak at the lift conference in Geneva. But this isn’t about the conference as much as it is about an important subject that I’ve been asked to address. While this idea is nothing new to economists, theorists, futurists and other intellectuals around the world, my focus is on those who are unfamiliar with the role they play in an underground, but vital economy.

I’m going to explore the undercurrent of social economics, namely social currency and social capital. And, I promise you won’t find it boring…

As we’re seeing with services such as Klout and PeerIndex, our stature in the social web is based on our actions and words.  Essentially, your “balance sheet” is available for anyone with a web browser to review, assess, and analyze. While this may seem trivial, progressive businesses are already factoring your stature into their customer index and your experiences may vary based on your social credit score. In addition, some credit agencies in the U.S. are also reportedly reviewing social graphs to explore associated credit risks based on who we know.

You are a bank. What works against us also works for us. Choose your investments wisely…but it starts with thinking about your interaction as investments.

I recently discussed the topic with Laurent Haug, the organizer of lift, and I’d like to share the conversation with you…

Laurent Haug: In what context is social currency emerging?

Brian Solis: We, from the mainstream to the earliest of adopters and greatest of innovators, may have missed an early opportunity to steer things in a more proactive direction. Instead, we are now playing catchup to what’s playing out as we speak… what we do and say in social networks equates to “social capital” and that one day it would be used for and against us.

The time has come to be mindful of the value we create in networks such as Facebook and Twitter, for ourselves. What we share, what we say, the smallest of actions from “likes” to Retweets to the simplest of updates form a digital representation of what we are. This persona can be leveraged when used effectively.

Is that the main reason behind users involvement in social networks?

No, of course not. Right now, the social web is a vibrant “egosystem“. When we were introduced to blogs, Facebook or Twitter, as human beings, we were simply excited at having an audience for our words and our experiences. With every reaction and friend request, we were rewarded to share more of ourselves. Now we realize something new: that what someone says can represent varying levels of value, whether it is an opinion or expertise. Who you are connected to is also important. We are judged by the company we keep. When combined, actions and relationships create a foundation for social capital.

With the emerging array of search and analysis tools, simple processes of data mining encourages advanced profiling that we, as users, are not, but should be, aware of.

For example, banks are looking at an individual’s social graph to determine their credit risk. In the blink of an eye, what could be considered trivial information becomes an influential element that will contribute to changing the direction your life will take. I believe we should make users more aware of this unfolding reality. This is about consciousness. How they engage online and who they connect with serves as social currency in every transaction.

Can you define social currency?

Social currency is represented in the resulting value and sentiment that stems from the exchange of social objects: words, videos, reactions, links. What I publish is social currency. We can measure the value of this currency in each exchange by its reach, resonance, and ultimately influence. However, it’s sum is greater than its parts. If I’m looking to weigh “who you are,” what appears in search as well as the presentation of your profiles, tells me more than you know. It defines who I am and how much I am “worth”. So social currency is a combination of actions and words.

Do you have a concrete example in mind?

While it’s difficult to call out individuals, we can take a look at how brands are establishing goodwill and investing in social capital through online engagement. I do appreciate what American Express is doing around Open Forum. For a brand, it is earning social capital through the investment of meaningful and valuable social currency. Its intention is to build a social community through value-added content, insight, advice, and community. The team is building a network and ecosystem, a complete engagement strategy built on social currency. They enlisted the brightest minds in the field of small business and placed them in a community where these people share content, expertise, and experience with everyone – without cost. It is a form of information commerce, with creation and curation of content. They also launched a mobile app to bring that experience to anyone anywhere. Their idea is to earn social capital by making a contribution to the wider community of small business owners.

What they want is not only immediate returns, but indirect and long term returns. American Express invests in priceless commodities: information and insights. They create a unique bond with the people they want to reach, and build social capital, something even stronger than goodwill. While intent counts, we are measured by what we do, not what we want to do.

RELATED: Stanford Law’s Ryan Calo on privacy harm and design as one solution…

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The convention for creating financial opportunities is evolving and changing the way we seed prospects, promote our expertise and prowess, and connect with those who can help us learn and advance through the facilitation of strategic and mutually beneficial alliances.

Digital capitalization is laying a foundation for expanding the need to cultivate and participate, not only in the real world, but also in the online networks and communities that can benefit us personally and professionally.

In an era of democratized publishing and equalized influence, it can be said that engagement and participation are a new, powerful and effective form of “un” marketing. At the very least, this is an epoch of empathy.

Social capital is a strong ally, an elite catalyst for lucrative relationships, and now a metric for qualification, consideration and ultimately success (however you define it).  This is a state of human economics. Our social capital and intellectual assets are defined by both online and real world conduct and its “balance sheet” is available for anyone with a web browser to review, assess, and analyze.

Reputation, trust, and relationships, are each earned at varying levels, through our action and words. Our interaction reinforces impressions and engenders experiences. As such, our personal and professional brands are essentially reflections of our contributions. In the end, we get out of it, what we invest in it.

By participating in relevant online communities and publishing content that promotes our expertise as it empathizes with those seeking information and direction in a way that literally speaks to them, we begin the process of building and shaping our online reputation, brand, and persona that traverses virtual, augmented, and actual realities. The ideas and wisdom we share and the relationships we forge only fuel its proliferation and stature.

Like any form of capital, Social capital rises and falls with the market and the individual to which it’s governed by the state of the industry and affected by the state of corresponding affairs. As it escalates, however, it unlocks opportunities that are commensurate with the community’s assessment of its value. In the same regard, the community will not support or reward lackluster, opportunistic, also-ran, or hollow engagement in the long term.

Again, social capital is measured by individual value and collective perception.

The Human Algorithm

But trust and reputation are only as valuable as their ability to represent you in your absence. And as in anything online, perception and presence are the focus of proactive programs that enhance the discovery process and steer recognition and stature in your favor.

As search plays an increasingly important role in the investigation process of surfacing qualified candidates and social objects around relevant topics, we quickly become brand managers for our intellectual and personal assets. Our livelihood now pivots on our ability to connect dots between who were are, what we stand for, and the value we offer.

You will be Googled.

You will also be Twittered, Flickrd, YouTubed, Facebooked, and LinkedIn’ed.

While Google is the standard by which all search is measured, those active in defining their presence in traditional search will do so through organic as well as through optimized techniques such as SEO. However, as search becomes social, the role of queries disseminates beyond Google with content sought and channeled directly within Social Networks as well as new breeds of real-time search platforms. As such, prominence is then ascertained by the digital shadows we cast across the traditional and social Web (yes, there is a difference) and also through our investment in driving strategic visibility. Essentially, our brand as defined by our views, opinions, thoughts, observations, and actions, becomes a social object that requires dynamic cultivation and placement.

The Human Algorithm becomes our lifeline to regulated exposure while also providing a foundation for constructing and enhancing our presence directly within the channels where prospects are seeking information.

Social Customer Hierarchy

As social media becomes ubiquitous, businesses will no longer possess the means to effectively scale and sustain participation across all conversations on Twitter, Facebook, blogs, and other online communities. Whether you agree with this or not, brands will face the need to prioritize who they engage based on what I refer to as the Social Customer Hierarchy. The level of influence and authority a customer or prospect holds determines their placement in the chain of preeminence.

Yes, we earn prominence and amass social capital through productive contributions to online societies. In the process, we increase our stature and amplify our voices and it will escalate consumer matters when other traditional means are exhausted. Brandishing this distinction however, erodes value, and over time, ranking and credibility are diminished.

Our online reputation and the activity that contribute to its definition are investments in our social capital. The return on these investments is evident in the opportunities and relationships that ensue and proliferate. Our social graph, the connections we forge and actively nurture, represents a very public testimony. If you’re not actively investing in its significance, you may actually take away from its net worth.

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My latest post is now up on TechCrunch. What follows is the unedited director’s cut.

The point of this article is to redefine how startups (not solely tech companies) view and define early adopters and the “echo chamber” in order to gain momentum in order to “cross the chasm” to the next tier of evolution, adoption, and monetization. This is about uncovering the very people who can benefit from what they’re introducing and in turn, evolve the product/service based on real world feedback.

We can not assume that early adopters and innovators are relegated simply to tech, silicon valley, .startups, or fanboys and girls of shiny new objects and features.

There are early adopters (aka savvy consumers) in every market segment, and that’s an irrefutable point. They create highly influential echo chambers with their own associated bell curve’s around the globe that stimulate and inspire their dedicate ecosystems.

We ALL need to rethink how to dissect and define “the echo chamber” because in the process, we’ll uncover that consumers, not just geeks, are also early adopters in their own right and they need to be treated as the a-list in their own communities. Thus, we must expand the traditional view of the echo chamber to include the “new” influencers across multiple markets, where they reside, as well as discover, share, and compel those around them. This broader, yet focused approach removes our “tech” blinders and frees us from solely focusing on “one” audience or demographic in order to build a global and pivotal groundswell.

The echo chamber, by default, is perceived as it is defined, by the people, not by a dictionary. This doesn’t advocate living in the echo chamber, only leveraging it, across multiple markets, to excel in the mainstream, thus bridging the chasms between them.

Refining the Echo Chamber to Excel in an Economic Crisis

“I would tell (entrepreneurs) to keep their day job until they got one year of funding, and if they couldn’t get that, then they’re not meant to start that company right now…. My advice to (start ups that don’t have a year’s worth of money in the bank) would be to raise money by reducing your own spending. If you can’t raise more money, you have to cut costs. And that’s what I’m harping on to my companies.”

- Ron Conway

We are witnessing an epic financial meltdown or long overdue resetting of existing business practices and the hollow markets they create. Or, perhaps we’re experiencing both of these phenomena. Either way, it has the nation gripped with fear, uncertainty, and an unsettling eruption of questionable advice confusing everyone, everywhere.

While the floor is crumbling for many industries much in the same way it did for Silicon Valley during the dotbomb years, the sky isn’t necessarily falling on the startup industry – at least not for those with marketable technology or products, dedicated and capable teams, an executable business plan, and access to the resources necessary to help it reach users and customers. To put it another way, we will not witness a great startup depression. There is only opportunity to grow your business, mind share, and market share. And, that time is now.

The U.S. financial market will always mimic a yoyo on an escalator. It goes up and down, but it’s always going up.

For those startups that are building and marketing usable solutions for consumers or businesses, there is much work to do. If you’re seeking angel, Series A, or even Series B funding, seek partners who are insulated from affected markets so that they can support you and your growth organically, without unnecessary pressure from external forces that are outside of your control. The money is still out there for worthy entrepreneurs.

Usually, when the economy slides, the first natural reaction is to cut expenses, conserve cash, and hunker-down to weather the storm. Any savvy and seasoned marketing and business veteran will advise you to do the opposite. This is your time to shine, albeit, strategically and intelligently.

“Great entrepreneurs build value and market-share in down markets. They go to work seven days a week and the(y) breakout when other folks check out.”
- Jason Calacanis

Now’s the time to get your head in the game and focus on what it is you do, and go do it better than anyone else. You’re either on the field or you’re on the sidelines.

Any company that intentionally pulls itself from the radar screen of their customers will be absent from customer decisions and referrals. In the process, you create a frictionless opportunity for your competitors to swoop in and fill the void.

Marketing, PR, service, and product development are now more important than ever. They will not only help you stay alive, but also fuel growth – even in a down economy.

There are always customers making decisions, so make sure that you’re part of the equation and process, wherever they go for information and insight.

Your business can grow with the groundswell and doesn’t necessarily require the instant adoption by the masses in order to succeed in the short term.

While there is always a need to attract mainstream users, this isn’t the time to stretch or over-commit resources to hit everyone all at once. Branding is an expensive proposition, one that requires time, capital, diligence, passionate teams and customers, and patience. As counter intuitive as it may seem, this is exactly the right time to market in and to the echo chamber to earn the influential support that will create significant, concentrated brand visibility and momentum, gaining strength and girth as it travels.

Influence and adoption historically have migrated from the edge to the center. Or using a more common example, users and word of mouth referrals travel from left to right along a bell curve that starts with Innovators and Early Adopters, peaks with the Early Majority and the Late Majority, and finally permeates with reaction from Laggards.

If you dissect the art and science of technology marketing using a car as a simple metaphor, your product serves as the chassis, your cash as the fuel, Social Media, Interactive/Web, Sales, SEO, and PR as the accelerator, marketing strategy and execution as the gears, RPMs as a market indicator for listening and responding, the speedometer to convey inertia, and you, as founding executive, sitting in the driver’s seat, steering and controlling the entire operation.

Marketing to the echo chamber, believe it or not, is how you get that car rolling, starting everything in first gear. Appealing to those who can help spark word of mouth is how you can accelerate, gain enough speed to shift into second, and subsequent higher gears, and attract new users and evangelists along the way, growing in distance and reach at every turn. It is the echo chamber that can help you efficiently gain velocity in order to progressively reach greater audiences and command additional financing and also revenue in the process. With its support and assistance, it is almost like starting with a colossal push.

Some of you are building valuable, independent businesses, while many are also creating innovative features and capabilities that can seamlessly fold into existing entities and products. Either way, you have to start by engaging those who’ll get it, and in turn, share it with their peers. It’s an ongoing process that strengthens with each cycle.

“Hopefully you are building your business in a way that is independent of the stock market.”
- Kevin Ryan

The world doesn’t flock to new things en masse. It takes a focused and progressive strategy that evolves and matures over time. In a down economy, this is non-negotiable.

Digg and Twitter are among some of the best examples of how alpha users can help promote a company or service by embracing these new solutions and religiously demonstrating why they are pervasive and useful. And, emphatic users also contribute to the community building process, assisting in the translation of the value proposition for different markets as well as enticing and compelling their peers to join them, which offsets and relieves the company from carrying the bulk of the responsibility for promotion and guerrilla marketing.

But, where are Digg and Twitter in respect to the adoption cycle? They’re not as far along as you think judging by the buzz and permeation of your social graph. These companies still have oceans to swim until they become household brands. But, that’s OK. They’re building a business, cultivating legions of dedicated user communities, evolving and improving their product, and still conserving cash. Remember, it took brands such as ebay, Youtube, Google, and Amazon millions of dollars and armies of enthusiasts and partners to achieve saturation – and many would argue that there’s still much work to be done.

I would bet on any company that earned the support of innovators and early adopters and took the time to listen to feedback in order to iterate based on real world needs, preferences, pains, and new ideas.

Remember, your story and corresponding benefits, as well as the product itself is going to be different at each step of the way. Different groups of people have different needs and also unique ways of hearing about something and making the decision to try it, let alone refer it. Without influence, you’re going to spend precious resources, more than you can afford, convincing people that they should pay attention. Peer-to-peer marketing is priceless and still your best bet for having a shot, and more importantly, making a long-term impact.

But you first need a spark, something to start that avalanche that grows as it races downhill.

The echo chamber is bigger than we think or give it credit for. In fact, think of the echo chamber as its own bell curve. Most of the blogs and users that naturally come to mind, may reside on the left side, leaving a wide array of technology enthusiasts to uncover and pursue.

Innovators and early adopters are global citizens and do not solely reside in Silicon Valley. Your marketing and PR should identify the voices and their channels of connecting peers to create and develop active, thriving, and vocal communities. Figure out who your market is today, tomorrow, next month, and set goals for user acquisition so that you can tweak your product and tailor your messages to those very people, as they’ll uniquely connect to your story, and also share it differently among their peers, as it traverses across the bell curve.

Remember, reporters, bloggers and online tastemakers aka trendsetters who spotlight innovation can send tens of thousands of new and loyal users to you almost instantly. I’m not just referring to unique visits of those who sign up, test things out, and then leave to try the next shiny service. When done right, the echo chamber can generate real world interest and support. It is these very users who tell you everything about what works, what doesn’t, and how to improve. These same individuals and networks also augment and complement your marketing efforts by legitimizing you’re products, associating credibility and providing pseudo endorsements, and in turn, giving you unprecedented access to their invaluable and highly connected networks of early adopters.

This is the time to focus on user acquisition. In the realm of new technology, education and the demonstration of practical and meaningful integration into the daily workflow or personal routine sets the stage for effectively connecting people to your story and value. This is edgework and in conjunction with innovators and early adopters, you’re pioneering influence and adoption.

Everything starts with an intimate understanding of the markets you’re trying to reach and an even deeper connection to the peers, voices, and other channels that influence them. You’re not marketing iPhones, gaming consoles, premium spirits, or new music artists. At the very least, you are redefining how people communicate, collaborate, connect, and ultimately work.

There’s a prevailing necessity to educate your markets and introduce not just new products and services, but also real world solutions that change the daily routine of everyday people.<

Therefore the goal to race from zero to 60 and hit mass penetration immediately is not the primary goal. If we look at business development and communications as a series of strategic stages, we realize that there are focused activities that we must pursue and smaller, reachable voices we must reach and convince to help us carry and adapt our story from stage to stage – each time, addressing the needs and pain points of the individual, respective groups.

Each step requires a dedicated, concerted approach in order to bolster the support of the individual ecosystems that contribute to user acquisition and the recruitment of passionate and energized believers, who will extend our efforts as a surrogate sales and marketing team.

Of course, as you learn, internalize feedback, change, adapt, and engage with your markets, the foundation for your business solidifies and begins to afford and beget expansion. It is at this point in time, when you can continue to expand your focus and reach to attract and inspire users residing outside of the echo chamber.

“It’s much better, in my opinion, to go with the freemium model, give a version of the service away for free to all comers, get a lot of users, get good market feedback, then develop a premium version of the product/service for sale to enterprise customers. If your free version is popular with a lot of users, your customer base is the target for the upsell and you might be able to live without an expensive sales force initially. And, of course, keep your costs really low until you start to get revenues.”
- Fred Wilson

Nothing beats a killer product idea and an impressive, objective, and focused team to carry it forward. Expectations count and will determine how you channel information and progress. Think too big and you’ll miss your target and burn through resources before you can ever earn any significant market traction. Aim too low and the market will pass you by.

In this volatile economic climate, the echo chamber can be your direct connection to success, or at the very least, notable and awardable momentum. It is a global incubator designed to help you grow, gain momentum, and ultimately propel your business across the bell curve to appeal to and attract a wider, active, and segmented user base – strategically, incrementally, and efficiently.

We live in interesting times and it’s up to us, and only us, to define our future.
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According to news makers, analysts, and experts and their constituents, the sky is falling. You can’t run away or hide from this very grim reality.

While we are in throes of a major financial crisis, it is during the most difficult of times when character is truly tested and defined.

Panic only leads to the further declination and eradication of progress.

Yes the market is slipping.

Yes, the financial market is resetting.

But the U.S economy, actually, the global economy, is a yo-yo on an escalator. It might go up and down, but eventually, it’s always going up.

Those who do not proactively contribute to the economy’s escalation are taking away from its ability to instill confidence and rally support.

So instead of running into a cave, shaking your head in disbelief, crying aloud, or scaring the s#!t out of everyone, ask yourself, “am I going to contribute to the alarm or am I going to dig in, dig deep, and do something about it?”

VCs are already calling for startups to cut expenses.

Entrepreneurs in turn hear that directive clearly as, “cut expenses.”

But, which expenses do they cut?

Here’s a simple answer…

Don’t cut or eliminate the expenses that strategically and cost effectively help you and your business engage customers and also the respective influencers who reach them and their social graph.

This is the time for entrepreneurs to realize that this is their opportunity to shine – especially if they have built something that businesses or real people can use to streamline their workflow or improve day-to-day routine.

In a down economy, tomorrow’s leaders are born today. It takes vision, focus, and a hyper-connected sense of what customers are looking for and where.

There is still valuable, helpful, and marketable innovation taking place today that people are willing to embrace.

Blindly cutting expenses for the sake of cutting expenses only fuels the hysteria.

It would be far more responsible of VC’s to help educate the people running their investments on how to best navigate these rough waters, what and where to cut and how to leverage transform these tough times into opportunities to increase mind and market share.

Remember, any company that intentionally pulls itself from the radar screens of potential and existing customers will find itself on a direct path to the Dead Pool.

The question is, what are YOU going to do about it?

Source: Sequoia Capital (via GigaOM)

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