From a conversation today with one of my SRI co-inventors:
Do you believe that the SRI will eventually cause 1% of global GDP to move
from the rich world to the developing world?
– REPLY –
I’ll think better as I write, so let me start thinking out loud. I have not thought about this particular question before.
1. 1% of world GDP is 700 billion dollars. Hmm…Looks like a pretty substantial amount.
2. Interesting thought. if we reach a trillion dollar market cap, then all we need is convincing our broader e-mail list to give away everything to the developing world. if you look at it that way, it is kind of scary. We can just run this business, and when our expectations become reality, a wealth transfer may be sufficient.
3. Of course, the primary goal is not to dump money on the developing world, isn’t it? Money can solve tons of problems. Hunger. Diseases. Shelter. But it would also create new problems. Unless we can tightly control how the money is used, the full benefits may not be realized. I guess the real help is empowering people with knowledge, so they can create value themselves. The real goal should be letting people participate. Right?
4. With 3 in mind, let me broaden the analysis. From a total economic value of standpoint, I have learned that disruptive game-changing innovations like ours create a lot of value for the economy as a whole. When it’s all said and done, how much does the entrepreneur capture all of the gross value created? Around 4%. Put this thought on its head – if we can generate 100 billion of profits for ourselves, over, say the next 20 years, the gross value will be 2.5 trillion, or 3% of the world GDP. What is the precise mechanism that will ensure some of that is captured in the developing world? I don’t know. It is true that the majority of the value is captured by developed countries, at least initially, so there are some challenges there. But with so much to go around, I’m sure we will find a way.
5. All this is great, but you always need a set of external triggers for a movement of this size. We are very very lucky – I think all the starts are aligning for us. Why? See below.
- Mostly due to the financial crisis, the financial literacy movement is getting stronger every day (I am reading and digesting everything I can in this area). Academics, such as Robert Shiller are writing a lot about it. Individuals, such as Sal Khan (I think I wrote about him before) now appears to be partnering with CNBC to develop finance videos, an initiative called “CNBC explains” (http://www.cnbc.com/id/41585735. These efforts are great and proves the demand for financial literacy. None has our unique angle though.
- A separate movement, called for Sports for Development and Peace (SDP) is also getting stronger. Find a link below to the article that ran on SI (“Sports Save the World”). You’ll like it 
http://sportsillustrated.cnn.com/vault/article/magazine/MAG1190627/index.htm
The article basically outlines a collection of various efforts in this area. There are problems, such as no clear framework and credentialing. Just like financial literacy movement, the world is moving there, but something is missing. That something is us.
- The interest for sports as well as the desire for risk management/speculation is at an all-time high.
- The internet, when it is said and done, will become the greatest invention of the 20th century, is providing us with all the tools to disseminate a message when one is not rich or a gatekeeper. The mobile movement is also excellent for us.
- Finally, we are moving to such a transparent society where values such as honesty and being authentic will be at the forefront more than ever. Of course, they always should have been – but it wasn’t necessarily that way. The way we do business – completely open – will work will with our generation and the future generations.
The first two, the financial literacy and SDP movements are cultural movements underway but they are missing something – well, they miss each other. We are the solution. The public/institutional desire is there, the technology is ripe and the dominant social values today match with ours. I think the timing is perfect. Even though I can’t see all the steps from here to there, the answer to your question is yes. We’ll get there.
– REPLY –
Good. Because, Prof. Jeffrey Sachs (who I am VERY fond of, http://www.earth.columbia.edu/articles/view/1804 ), says a $100B/year increase in developing world GDP (1/7th of your figure) is more than enough to END extreme poverty and “put the first rung of the economic ladder within reach so they can climb up from there.” Getting beyond the infrastructure problems, is education and the DESIRE for it. We’ve got the magic bullet here. Hardly a clip I watch doesn’t show some poor little soul kicking a grimy soccer ball around the parched Earth. Nothing to eat and nothing to drink.. yet kicking a ball around in the dust.
Moneyball could not come out at a better time. Thank you Brad Pitt (who saved the movie from the scrap heap). This will play well into our upcoming support letter, CME license, financing project.
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