Virtual Karma Gonna Get You, Gonna Look You Right in the Face

Thursday, August 18, 2011

Apologies to the Beatles for that headline, but it is what came to mind when I started thinking about the most recent conundrum to come across my desk. 

Marketplaces are scaleable and they provide ready streams of revenue, but what happens if you are trying to build a company around something as simple as doing someone a favor, where the only currency is being nice to each other? A company in Manhattan is trying to do just that, but they are also finding that when you build something using only the milk of kindness, you still need a credits system. 
FavorTraders knows that a favor requested and answered in realtime is a favor done indeed. FavorTraders is what I would call a help collective.
The site is really about fostering pre-existing relationships, rather than interacting with strangers, as is often the case when asking for help online on websites like Craigslist.  “It’s a place for people who know each other to go to help each other out,” [FavorTraders Founder Jennifer] Koenig said.  “People don’t realize how many people they know,” she continued, so Favor Traders can help “facilitate and foster relationships online in order to build and grow them offline.”
Rather than a cash-based system, Favor Traders operates using a free virtual currency of credits.  Users are given 20 credits upon registrating, each of which are equal to an hour of a person’s time.  People are “paid” in credits once a favor is completed and more credits can be earned by accepting others’ favor requests.
But in talking with the founder the other day, I learned that she has been puzzling over a hard-to-miss problem: doing something for someone else is good, and nice, but how do you reward someone for doing that, and what do you use to reward them?
So far, she's hit upon the idea that after amassing a certain number of credits, a favor trader can take those credits and redeem them at a local coffee shop, or maybe exchange them like a virtual currency for something like free shipping.

I talked with Re-Wired Founder Bob Moesta about this, and after a bit of talk, we agreed that any marketplace or website that seeks to make a market out of favors traded without offering any kind of compensation for the favor milks the word of its meaning. In other words, says Moesta, "If I ask you two or three times for a favor, that's a favor. But if I ask you ten times, a hundred times, that's a demand."

Demands need to be compensated. Anyone working in this field will have to work out two things:

1. What do you call the system of exchange and currency that enables the use of and the dispensing of favors for the gathering of good social karma?

2. How do you encourage someone to do a favor without getting anything but a virtual credit system in return?
Can anyone ever really do something without hoping to get anything in return? This is an especially annoying question on the web, where even interactions have started to garner the label "social currency." 
Someone, somewhere, invisible or real, is always keeping track. Call it your virtual karma. 
There is going to be increasingly more interest in groups of online communities that do more than just talk about stuff.  Help verticals in marketplaces exist to help you find the most helpful and valuable person you know for a specific need, utilize their help and accomplish the goal needed.
There have been other attempts at doing this. There’s an app on the iPhone, for example, that let’s you find a “go’fer” in your neighborhood who is willing to do a small chore or errand for a few bucks in cash. The app relies on GPS and proximity to figure out who is available in your area. Then those persons, if they are signed into the system, determine if the task you want completed is worth the time they want to spend and the cash you want to give.
These may seem like novelties, but in an economic climate like the one we experience now, the idea of doing a handful of chores a day for straight up cash and enough to feed the kids and pay the bills each week is not really implausible.  Some of the most successful business people in our country got started doing much less for a few nickels a day.

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