[This is Part 2 of a series originally published on crowdsourcing.org, 21 Sep 2012]
II. Inside the Cult
It was satisfying and fun collaborating with others on efforts to push the crowdfunding exemption from idea to reality. I’ve always had an idealistic view of the exemption, and I saw that my compatriots felt the same way. We were (and are) excited about it, but ultimately, it’s just the creation of a new asset class. Others might see our beloved chunk of legislation as just another tweak of the financial system, too complicated and boring to understand. Or, worse, a suspicious-sounding new loophole that, as always, lets the conspiracy of scum in high places skim more money away those of us who do our nation’s real work.
It probably doesn’t surprise anyone that the people who worked as unpaid volunteers for a piece of new legislation hold high hopes for it. But for me, as someone who’s never been much of a joiner or a zealot, had never spent much time on political issues before, and is generally skeptical of any purported “magic bullets,” these group feelings were a new experience. I’ve processed them, and here are the results, ten reasons why I believe the crowdfunding exemption gained something like a cult following:
Desire to Help
Against a backdrop of difficult economic times, with too many of our friends, family, and communities suffering from joblessness and foreclosures, we felt that a crowdfunding exemption would help. If implemented well, this legislation will foster meaningful jobs, innovation, economic vitality, and community resilience– all without requiring any additional government expenditure.
In The True Believer (1951), Eric Hoffer writes (p. 16), “[P]eople with a sense of fulfillment think it a good world and would like to conserve it as it is, while the frustrated favor radical change.” Well, we were frustrated. The established channels lock out many worthy entrepreneurs and other creatives from investment, which doesn’t seem fair. Crowdfunding offers a new path through which outsiders can get what they need to make the contributions that they know they’re capable of. This is something that’s easy to get excited about.
Hoffer also writes (p. 20), “For [people] to plunge headlong into an undertaking of vast change, […] they must be wholly ignorant of the difficulties involved in their vast undertaking. Experience is a handicap.” Whether or not our political undertaking qualifies as “vast,” it’s true that many of us, myself included, were attempting something that we had no previous experience with. That’s how things often work with crowdfunding, and I believe our naïve perspective made us more engaged, eager to learn from each other and to share with each other what we knew.
The crowdfunding exemption resonates with core American values of entrepreneurship, independence, and “Yankee ingenuity.” Entrepreneur Howard Leonhardt expresses this well in his March 2012 blog post “The Enormous Implications of Crowdfunding“:
We are about to experience the grandest expression of human creativity and economic growth ever seen in the history of human civilization. […] Crowdfunding is human will expressed in pure form. A person with a vision becomes a dream funded on a mission. It is the explosive combination of democracy and free market capitalism.
Whether you’re a Democrat, Republican, Libertarian, or independent, this vision resonates with deep and proud narratives that we use to define ourselves as Americans, and express the hope that our country offers to the rest of the world.
The Underdog Story
I believe that our minds are always trying to describe the world in terms of archetypal stories, because they serve as compression mechanisms that enable our finite brains to store, retrieve, and think about huge chunks of messy, data-dense reality. The exemption movement fits the familiar underdog narrative — a small, scrappy group of ordinary people who, through collaboration and shared hope, go up against the evil empires of big DC lobbyists and Wall Street and win, changing the world (or the galaxy?) for the better.
Power and Conspiracy
As watchers of and participants in the discussions around the crowdfunding exemption, we were in the know about a major change that could potentially affect every person and community in the country, but that few people had even heard of. For many of us (certainly for myself), this was probably the closest we’ll ever get to being in a proverbial smoke-filled room, even just as a fly on the wall.
The “Occupy” Influence
Through much of our activity on the crowdfunding exemption, the Occupy movement was a major news story. I was sympathetic to the movement, and indeed one of the things that most excites me about the crowdfunding exemption is how it eliminates the monopoly that Wall Street has on how the 99% can invest. Through registered crowdfunding intermediaries, non-millionaires (“unaccredited investors”) will be able to invest in their friends and communities rather than having to choose what’s offered by the investments-industrial complex, a McMenu that’s devoid of local, small-scale ingredients. (To be completely accurate, there is already an exemption that permits up to 35 unaccredited investors to invest privately in an offering, but securities attorneys discourage this.)
I never felt that I had the time to make it down to the local protest, even though I wanted to. Instead, I thought, “they’re doing their thing, and I’m doing mine.” Any reporters interested in grassroots financial reform were monopolized by the Occupy protests, which provided far more drama and better photos and video than what we were doing. Getting attention can be effective, but as we found out, so can being under the radar.
Desire for Interestingness
I’ve always loved hearing new ideas and learning new things that people are attempting. Not to sound too detached, but creative initiative and entrepreneurship are just plain interesting, as well as healthy, and I would enjoy seeing more of it. Last December, Columbia Law professor John Coffee testified that an insufficiently restrictive crowdfunding exemption “would likely mean that every barroom in America could become a securities market, as some unregistered salesman, vaguely resembling Danny DeVito, could set up shop to market securities.” When I first read this, I thought, great– if so, that sounds like fun. It will lead to some interesting (and possibly useful) barroom conversations.
The Global Transformation Story
Another archetypal story that applies to crowdfunding is the vision of a better, more connected future, which shows up in religious and quasi-religious prophecy, political and utopian movements, and technology prognostication. True believers see crowdfunding in the same terms, as an innovation that will increase the connectedness of humanity, thereby bring us all to a higher consciousness. As Ian Mackenzie explains in his essay “Why Crowdfunding Creativity Is Just The Beginning,” on Shareable.net:
[W]e are on the cusp of transitioning to a society that closes the loop on this new model. Rather than perceive ourselves as individuals with only the capacity to create or consume, what does it mean to act on the knowledge that we are, in fact, all interconnected?
Many true believers who are working to create the new infrastructure of crowdfunding are baking in global social and environmental consciousness. We have an amazing opportunity here. Group hug for all of you who agree, and let’s make it a nice, long one.
One final reason, straight from Psych 101, is that people don’t want to believe that they’re wasting their time. We expended time and effort on our cause, with no pay and almost no recognition outside of our own circles. Any thoughts we had that we might be wrong would have caused a cognitive dissonance that (in the absence of corroborating evidence) our minds would need to banish. And the more effort we undertook, the more we needed to feel it would all be worthwhile. Of course, I hope that we were right, but the crowdfunding exemption is still an experiment, and we should start getting the results next year.