Consumerism Now a 2-Way Conversation?

Remember when your older cousin in Indianapolis used to sleep outside to get Aerosmith tickets back in the late 70’s?  Not only was that a display of sheer badassery for sleeping in a JC Penny sleeping bag on the sidewalk in the name of rock and roll, but it was also a classic illustration of the traditional 1-way conversations between corporations and consumers:  Corporations say “jump” and zombie-like consumers open their wallets.   What if your cousin were able to have a 2-way conversation in the name of redefining consumerism?  What if he and his mutton chop wearing KISS ARMY comrades were able to tell Aerosmith when and where they were going to perform in Indianapolis?  What if consumers applied that approach to every product or service available on the open market?

The application of this critical mass, 2-way mentality would send shock waves across the market in two key areas:

1. Funding- Slow, but significant shift in the roles of seed capital, venture funding and angel investing
2. Social Media- Unprecedented consumer mobilization across social media and community platforms like Facebook, Ning, Twitter, Yelp, etc

A few companies have been doing this from time to time over the last few decades.  But, the rules have changed.  Consumers don’t use rotary dial phones anymore to communicate.   They use social media like trained assassins.  The sway held by consumers is stronger than it has ever been in the history of supply and demand.  This is especially sobering given the vacuum of funding entrepreneurs and small businesses face in the current market.

What happens now?  I think we’ll see 3 phases of this pan out in the future:

1. Unwilling Funding
2. Consumer Seed Funding
3. Micro-Niche funding

Unwilling Funding

Companies that have an in-demand product and are unwilling to seek funding (either internally or externally) turn to consumers for pre-orders.  NIS, the video game developer based in Santa Ana, CA, have done exactly this.  Having no desire to fund the re-release of Holy Invasion of Privacy, Badman! What Did I Do to Deserve This?, NIS has explicitly told 1000 consumers to “put their money where their mouth is” if they want to get this cult-status game.  I predict NIS will get these pre-orders with ease as long as the price point is acceptable to gamers.

They can facilitate the pre-order model via their Facebook fan page, Yelp business account, Twitter feeds, Ning communities, etc.

Perception:  Consumers feel like they have a voice and can affect business

Reality:  Like a drug dealer, corporations still hold 100% control and perpetuate the 1-way consumerism conversation

Consumer Seed Funding

Eventually, we’ll begin to see more start-up companies looking to source seed capital directly from consumers.  Gutsy companies (a game publisher or developer, for example) that plan to create or publish product relevant  to a tightly defined demographic will be able to go to consumers directly for money.  Sound crazy?  Not really if you think about the variables that would drive a savvy company to think outside of the box in that way:  decline of seed capital sources, more stringent conventional lending regulations, saturation of vertical/region/niche via competition, etc.

Prosper.com has been doing this for the last few years and it seems to be working well.  Though most people utilize it to consolidate credit card balances at a lower APR, it has seen plenty of unique funding scenarios that would make any prospective product or service developer feel warm and fuzzy.

I’m hoping we see more of  this sooner rather than later.  I think the upcoming business owners of the Echo Boomer and Millennial generations will define risk aversion in ways never thought of before by their parents and grandparents.

Perception:  Consumers feel like they have a voice and a hand in creating something that is relevant to them.

Reality:  Company will need to be OK with relinquishing a small amount of control to their brand advocates and consumers.  This will fully begin the 2-way conversation and begin to alter how we define consumerism.

Micro-Niche Funding

I’m going out on a limb here, people.  I’d love to see a push for a Micro-niche trend in funding.  In keeping with the game example,  we’d see a company identifying and communicating with an uber-niche group that all donate small amounts of money to see a highly specific game succeed or be created from scratch.  The success of this approach will be dependent on the recruitment of like-minded people in social media communities by fellow evangelists and advocates willing to take a chance on something they love.

Given the nature of such a small and specific group of funding providers in this scenario, we wouldn’t see games or ideas that would be scalable on their own.  Rather, it could serve as an incubator for up-and-coming businesses designed to land bigger fish so that they could target a broader market; should they decide they want to go that course.

Perception:  Consumers feel like they have a strong sense of ownership and inclusion.

Reality:  Consumers will be able to initiate fund-worthy ideas and fund them.  2-way communication is in full effect and traditional companies are shaking in their boots.

End of Diatribe

Whether I turn out to be Nostradomus or a long winded writer is irrelevant.  The future of start-ups and how they are intertwined with consumers and social media needs to be talked about in non-traditional ways.  I can’t wait to see consumers start giving a damn and speaking more and more with their collective pocket books; not just in purchasing habits, but also in future funding activities.

Do you have 2 cents to add?  Are consumers too apathetic to realize and do something about the power they have?  Tell me what you think.