Request for ISA Startups

In the U.S., student debt has surpassed $1.5 trillion, which is higher than credit card debt. Naturally, students are looking for alternative ways to finance their education which allow them to focus on learning, rather than the burdens associated with incurring debt — stress, a requirement to get a well-paying job to pay off debt, etc. Student debt is clearly a major issue, and there are a number of companies working to resolve the issue through Income Share Agreements (ISAs).

Income Share Agreements are a document that allows someone to borrow money from a lender in exchange for a portion of their future income. If the borrower is earning under a certain amount of money, they do not have to pay until they earn over the minimum payment amount. The ISA structure, unlike student debt, takes into account individual circumstances and ensures that people only pay back money if they are successful. ISAs are often compared to “equity” because people can borrow money without having to pay it back until they earn a certain amount of money.

In that regard, ISAs have the ability to align the incentives of the borrower and lender. If the lender helps the borrower succeed, then they will earn a higher return. However, if the borrower does not succeed, the lender will make nothing in return. This effect is especially important in terms of educational institutions that leverage ISAs to increase access to education. For example, Lambda School, a vocational coding bootcamp, allows students to pay a portion of their future income in exchange for participation in the program. If Lambda succeeds in helping people find a job, they will earn a good return on their investment. However, if Lambda’s advice has not helped someone, then Lambda will not make any money.

In addition, Income Share Agreements also help increase general access to education. ISAs allow those who would be unable to take out a student loan — perhaps they have a poor financial history, cannot find a cosignatory, or are considered too risky by a lender — to borrow the money they need in order to cover their education. As ISAs become more popular, people will have access to more educational opportunities than before because they can commit a portion of their future income, rather than paying upfront, for education.

Another benefit of ISAs is how they can encourage entrepreneurship and help protect the borrower from downside risk. According to dozens of studies, student debt decreases the chance that an individual will pursue the path of starting a company or co-founding a company because they need to make enough money to repay their debt. One study found that the share of new entrepreneurs between the age of 20 and 34 fell to around 25 percent in 2014, from around 35 percent in 1996.

As student loans continue to rise, it is likely that younger people — who are commonly referred to as more entrepreneurial-thinking than generations — will avoid the path of starting a company because of the income insecurity. ISAs aim to change this by ensuring that people don’t have to pay back money until they earn over a certain amount. Students are free to take more risks which could have higher pay-offs and are protected from some of the downsides as the person will not have to repay their debt if their venture fails.

There are however a few problems with Income Share Agreements. The first and perhaps most notable is the ethical and cultural issues associated with the documents. Some people may see ISAs as a form of “indentured servitude”, and although this argument has been disproven, the image will still be retained by a few people in the public. In addition, there are many questions surrounding at what age one should be able to enter into an ISA, what percentage of income one can commit, et cetera. Future legislation will likely address a few, if not most, of these issues, but there will still be people who do not like the concept of committing a portion of their future income in exchange for an upfront payment to do something.

There are numerous other risk factors in ISAs, such as the lack of regulation, which means that ISAs are currently more open to abuse because there is no clear framework for structuring an ISA. In addition, there are issues surrounding whether or not ISAs will realize adverse selection at scale — a term used to describe when people are chosen based on their prospects for success, rather than on their personal aptitude — among other concerns.

Income Share Agreements have an exciting future for sure, and the work of Lambda School, Avenify, Holberton School, Lumni, and dozens of other companies is evidence of that. At present, ISAs have been primarily explored as a method that people can use to borrow money for education — vocational or institutional — but there are also wider applications which could be realized by these documents. One thing is for certain: this is only “Generation One” of ISAs. In this article, I am going to outline a few ideas I have had about ISAs in the last few months which I think should exist, and how they will contribute to the overall development of the agreements.

Before I continue, I should add the caveat that not all of these ideas will be venture-backable, and many of them remain theoretical, but either way I feel as if they should all exist in some form.

Kickstarter for People

Upstart, founded in 2012, was a company that aimed to create a crowdfunding platform for people, similar to Kickstarter. The platform allowed passionate young people to raise money for their education in exchange for committing a portion of their income. Investors could earn a return based on how much they had invested in the young person, and only if the young person succeeded. The core idea behind the platform was to increase access to education by allowing the crowd to invest in Income Share Agreement-based arrangements, and ultimately allow more people to pursue their passion.

Upstart failed a few years later though. The primary reason attributed to their demise was a lack of interest in the platform. Only accredited investors (those who have earned over $200,000 per year for two years, or have a net worth of over $1m) could invest in the people listed on the site, which means that it was difficult for “Upstarts” to raise the money they needed to complete their campaign. In addition, a general lack of regulatory certainty made it difficult for Upstart to become more established in the space out of fear that regulation could significantly affect their platform. Upstart has since pivoted toward more traditional loans and still exists today, but they demonstrated the fact that such a platform could be viable.

Like Kickstarter, a donation-based crowdfunding service for small projects, a “Kickstarter for people” would allow people to raise money from the crowd for themselves. The money could be used by borrowers to move to another city, take a local college course, enroll in a university, or it could be used by borrowers to start a company or side project. If the person earns over a certain amount of money, they would repay a certain percentage of their income to the platform, which would distribute that money to investors proportional to how much they had invested in the startup. This platform would make it easier for people to raise money from their friends, family, and community, and allow them to profit from the individual’s success in the process.

The Jumpstart Our Business Startups (JOBS) Act, was passed in 2012 and was brought into force in 2016, which legalized equity crowdfunding for businesses. This regulation allows private companies to raise money through equity crowdfunding campaigns (with some restrictions) and reduced some of the restrictions associated with facilitating investments. Anyone can invest in an equity crowdfunding campaign, capped at a certain amount depending on their income. It is unclear whether this would have any impact on the Kickstarter for people idea, but I believe that it creates a firmer legal framework regarding what a crowdfunding for people site would look like.

In addition, the Investing in Student Success Act is being considered in the U.S. Congress which will create a legal framework for ISAs and will institute a set of consumer and borrower protections to mitigate potential abuse in the future. The act also states that companies whose business “substantially consists of making ISAs”. This regulatory change, if enacted by the Congress, may make a crowdfunding for people platform more viable.

Mattermark for People (h/t Erik Torenberg)

Mattermark is a platform designed to help companies and investors create lists for prospective leads. Mattermark aggregates data from a variety of different sources and helps companies to identify growing startups that could become competitors, and venture capitalists identify startups that could be good candidates for investment. I think there that a “Mattermark for People” platform could be viable in the future, which would allow people who are interested in investing in the asset class to get more data about people before committing any capital. The structure of this platform would be important — individual privacy would have to be retained — but I feel as if this supporting infrastructure will be necessary if free-market ISAs start to become popular (i.e. peer-to-peer lending or a “Kickstarter for people” platform).

ISA-backed Free Learning

Free Learning” is a method of learning where individuals pursue their own path based on their evolving interests, rather than following a specific syllabus developed by a third-party. Free Learners take an individualized and interactive approach to learning and value-producing work over reading a book or listening to a lecture. Free Learners let their natural sense of curiosity take them away, and allow that feeling to guide them toward finding their true passion. I have never labeled myself in this regard, but I would consider myself a free learner, and I spend a lot of my time pursuing personal education based on my own interests outside of the traditional system.

Right now, free learners can seek capital from grant programs such as Pioneer and Emergent Ventures to pursue their interests in more depth, but aside from that, there are few sources of capital available. Although a “Kickstarter for people” platform could serve this function, I believe that a company that focuses on investing in free learners via ISAs would be viable. The company would invest money in free learners and pair them with mentors, provide them with resources and introductions to experts, and generally act as an advisor in the individual’s success. The company would invest money into the free learner and earn a return if the person becomes successful and earns over a certain amount of money.

Index Fund for People

Index funds are a type of mutual fund which invests in a variety of different stocks, and offer people the ability to invest in the fund and earn a return which is equal to the aggregate return of all of the holdings of the index fund (for example, the Standard & Poor’s 500 Index). The idea is that rather than an investor committing capital to dozens of different companies, they can make one investment in an index fund and benefit from the diversification of the fund. The fund will have invested in dozens — perhaps hundreds — of high-potential companies that meet a certain criterion, which reduces some of the risk associated with investing. The value of the fund will mirror the aggregate return of all of the companies in the fund.

I believe that an index fund for people platform could work, perhaps in combination with the “Kickstarter for people” or ISA-backed free learning models, which would allow outside investors to invest in a diverse portfolio of high-potential individuals. In this case, the incentives of the borrower and the fund would be aligned — the fund would only earn a return if they helped the borrower succeed. Lumni Fund, a company that invests in ISAs for college students, allows outside investors to join the fund and earn a return equal to the overall return of all students. If this were to be available, it may encourage more people to invest in people because the risks associated with the asset class are reduced.

Pooling for Founders

Many founders have started to pool together a portion of their equity in their company with other founders. The idea is that by pooling together future equity, the incentives of all pool members are aligned, and so pool members are more likely to offer additional support to their peers. If a company exits, the equity would convert to cash and would be distributed equally among pool members.

Pooling together outcomes means that pool members can celebrate each other’s successes and perhaps earn a monetary return if they help each other succeed. In the same regard, if somebody is not succeeding, then pool members are incentivized to provide them with additional support and advice because they stand to earn a return if they succeed. The act of getting involved with somebody’s life is also very rewarding, which would be another benefit to this model. The success of the top pool members will mean that those who failed can still earn money for helping their peers succeed, which could then be invested in a new venture.

Ultimately, pooling would allow founders to de-risk entrepreneurship — if they fail, they can still benefit from the success of others. Venture firms such as the Upside Partnership are experimenting with giving portfolio founders a share of the venture fund’s success. I believe that such a model could be applied with pools of founders who could collectively reduce the risks of starting a company. The success of a pool would largely depend on the specific structure and quality of founders though, and there are still risks associated with this model. Either way, I feel as if a service that formalized this arrangement and made it easier for founders to set up their own pools would be viable.

This model has already been leveraged by Pando Pooling and Big League Advance, two companies that are working on pooling together the future incomes of baseball players. The chances of one entering the major leagues in baseball are very low, and these companies aim to de-risk pursuing a path in baseball by allowing people to benefit from the success of others via a pooling-based structure. This structure could also be leveraged in environments such as business school classes — everyone joins the pool, and will earn a return as they help their peers succeed post-college.

Community Aggregation

I also believe that the “pooling for founders” idea could be applied on a community basis, where people became cross-invested with the success of others by aggregating their future incomes. Unlike the index fund or pooling idea which would be based on earning a return for investors or founders, respectively, I believe that people could sign ISAs with their closest friends in order to align their incentives.

This would incentivize people to get more involved with each other’s lives and decrease the risks associated with taking on more ambitious projects. If somebody asks you to review their essay, you may spend 10 minutes reading it over and providing some basic feedback. However, if you were invested in their future success — consciously or subconsciously — you would likely invest more time and energy in helping the person write their essay because you can benefit from their success. This type of community aggregation exists in poker — referred to as “staking” — where players and poker investors buy a stake in other players’ potential winnings in exchange for covering their buy-in for a tournament (the World Series of Poker buy-in is $10,000, for example).

Perhaps there could be an ISA for programmers in Portland, OR, which aggregates their future incomes and aligns their incentives in the process. I am not sure how this would work as a startup, but perhaps a company or a non-profit that provided legal services or structural advice would be viable. Maybe a more viable take on this idea would be to allow people to aggregate their outcomes in cohorts — for example, Lambda School students — because a community already exists. This is more of a theoretical idea than the rest, but I still think it could be viable. I also think that there could be a room for derivative securities based on ISAs, which allow people to invest in certain industries or locales— but there is still a lot of progress that needs to be made on the infrastructure side.

Another way to think about this is if high school or college students could enter into an ISA with their teachers, which would incentivize them to provide higher quality education. Many areas suffer from a lack of capital invested in their schools, which means that high school teacher salaries are low.

This makes it difficult to encourage more people to pursue a career in teaching, and it makes it harder for poorer areas to attract the best talent they need to educate people better. If these areas could hire better teachers, the students they teach could likely generate great economic value for the area based on the teacher’s ability to provide quality education. What if students signed an ISA with their teacher? If a teacher was teaching the next Musk or Bezos, they could stand to make a very large return by helping them reach their goals. This would have to be a low amount, of course, but either way, it would still incentivize teachers to invest more time and effort into teaching.

LegalZoom for ISAs

Income Share Agreements are relatively complex documents in terms of the specific legal terms contained within the agreement. A “LegalZoom for ISAs” company would provide legal services for those interested in experimenting with ISAs and would help people navigate the evolving regulatory environment.

In addition, this company could help establish a set of industry standards that their clients must comply with, thus improving the overall quality of ISAs in the marketplace. This company would help people who want to enter into an ISA in a cohort, assist those in raising money from private investors, among other things. Vemo Education is already doing this for higher education and vocational schools, but I believe that as new ISA ideas become popular, this will be needed. If private market ISA investors start to become more popular, they will need a place to go to get legal advice and seek help on how to administer human investments at scale.

ISA Tracking

At present, there is no legally prescribed percentage of income that one can share with outside individuals or institutions. When regulation is enacted, it will still be difficult to keep track of who has an ISA with what company, how much they are sharing, and what documents they need to send over each month or year. Rather than ISA issuers developing in-house tools — an expensive and time-consuming process, especially in times of regulatory uncertainty — an “ISA tracking” company could act as a central authority for ISAs and ensure that all participants are keeping up with their obligations.

Such a company would request and interpret taxation documents from ISA lenders, keep track of any deferments, and ensure that students are making payments on-time based on the terms of their ISA. In addition, if enough people used the company’s services, they could ensure that nobody enrolls in two ISAs at once, or shares over a certain percentage of their income, which would protect all investors in the individual. The company would charge a small fee to schools in exchange for their services.

Blockchain Supporting Technologies

One of the largest problems with ISAs is how we are going to manage them at scale. I believe that crypto and blockchain technology could be used to create the relevant supporting infrastructure to make ISAs more manageable at scale. Cryptocurrencies could be leveraged to tokenize ISAs, which may encourage more people to invest in them.

The blockchain could be used to administer smart contracts based on the Picotte model which would help ensure that all participants were in compliance with the terms of an ISA. This would make it easier to manage ISAs at scale and integrations could also be developed that automate common processes. I also believe that a secondary market for ISAs could be opened on the blockchain — based on the strength and peer-trust nature of the network — which would allow people to trade and invest in ISAs. The ethics behind this are quite clouded, but if it were attempted correctly this could be interesting.

ISA-Backed Housing(h/t Geffen Avraham)

Co-working and co-living spaces are becoming even more popular, and younger people are opting more for rental-based accommodation over purchasing a home outright. The rise of co-working spaces such as WeWork, and localized co-living spaces in cities like SF and NYC show that people are becoming more interested in the idea of working and living in communities. I believe that ISAs could be used by co-living spaces in order to increase access to housing for young entrepreneurs and innovators who need a place to live.

If you are moving to SF, aside from immigration costs, housing costs will most likely be the largest expenditure incurred during and after the move. A co-living space allows people to rent out an apartment or house at a cheaper rate because many people are living in the house with them. If this were to be combined with ISAs, rather than paying rent, people could commit a portion of their future income. If residents are successful, the returns generated by the co-living space could be used to expand, offer better services, host more collaborative dinners or workshops with experts, and overall increase the quality of the environment. People can move to the co-living space and pay nothing until they earn over a certain amount, which means that their move will be smoother and immediate housing costs will not be an issue.

This would only work for salaried positions though. For entrepreneurs, pro-rata rights could be taken or ISAs could be converted into equity which could be sold to another investor in the founder’s next fundraising round, and so the house would be able to earn a liquid cash return from the resident founder. “Topos House, but paid for through an ISA” could be a really interesting idea.

ISA Accreditation Body

One of the major barriers affecting the wide-scale adoption of Income Share Agreements is the lack of regulatory certainty. Austen Allred, founder, and CEO of Lambda School, humorously proclaimed that everyone at the Life Capital Conference wanted to be regulated, which is not a normal behavior among startup founders. This is because without regulation ISAs are open to abuse which may make it more difficult for companies who are using them to benefit others to continue offering their services.

While the Investing in Student Success Act has been drafted, it has come to a relative standstill on Capitol Hill, and although there are state-level regulations being considered in California and perhaps other areas, they do not address ISAs nationally. In addition, there is very little ISA regulation, if any, being considered outside of the U.S., even though ISAs are being used around the world today — Europe, Latin America, Canada, and other regions to name a few.

Rather than waiting for regulation, I believe that a free-market ISA accreditation body would be useful. The body would develop a clear set of ISA standards which could be adopted by ISA issuers to showcase their commitment to offering lender-friendly terms. The body would issue certificates to ISA companies if they comply with those standards, and would frequently check-in on ISA issuers to ensure they are implementing the best practices set forth by the ISA accreditation body.

Further, the institution would also respond to any general complaints about an ISA issuer’s practices and help resolve any disputes between lenders and issuers who are accredited by the body. This would ensure that a strict set of best practices are developed for the ISA industry, which would set a good precedent for how new and existing players can offer better and more favorable terms. In addition, the principles developed by this body may even inform future regulatory action as well. I feel as if this body could also expand to offer additional support services to ISA issuers, and perhaps commission studies regarding their long-term viability, which would help with the overall growth of Income Share Agreements.

Income Sharing

Income Share Agreements are very interesting documents which have the potential to increase access to services such as education, and also align the incentives of the lender and the borrower. If the borrower succeeds, the lender will earn a return, but if they do not, the lender will not earn anything. This incentivizes the lender to provide higher quality services and offer additional opportunities to lenders so that they can secure a return. Lambda School has been experimenting with living stipends to help people focus on their education and not getting a side hustle to pay for living costs, hiring partnerships to help people find a job immediately after graduation, among many other things. ISAs will result in the bundling of a variety of different services in education to help people find a job easier, because the more services that a school offers, the more likely their students are to be successful.

There are a variety of different applications of ISAs outside of education as well — PassRight for O-1 visas, Newcraft for finding apprenticeships, et cetera. ISAs have the potential to revolutionize many different industries, and I am excited to see what new experiments are launched to help better capture the potential of the agreements. I am also interested in seeing how people alter the very concept of an ISA to help make it more appealing. What if individuals in a community became cross-invested in each other to balance outcomes and give people a second chance if they have failed? What if we allowed investors to convert their ISA into pro-rata rights if somebody starts a company after college? What if ISAs are tokenized? These questions and more will likely be considered and explored in the near future.

I believe that ISAs have a strong future, and are perhaps one of the largest innovations in the financial industry over the last few decades. There are barriers for ISAs, namely the lack of regulation, cultural skepticism, and ethical issues with the structure of some agreements, but with some work, these issues could be resolved — many already have been. There is also a lack of substantial data regarding the long-term viability, but I believe that as more companies enter the space, academia will commission more studies and companies will start to be more transparent in order to encourage participation in ISAs. ISAs have the potential to help society access all of the untapped value around the world, and thus generate more economic value and allow more people to explore their passion.

To quote from Austen Allred, founder of Lambda School: “There will be a lot of “Lambda School for x” approaches. Some will work, some will fail, and some will just be Lambda School. But ten years from now there will be millions of people involved; people creating and capturing [the] wealth that otherwise may not have existed.” In other words, there will be a lot of experiments launched regarding ISAs in the future, and some will fail. However, ISAs have the potential to generate a new wave of opportunity to passionate innovators who have the ability to change the world.

If you are working on any of these ideas, or have other ideas about the future direction of ISAs, please reach out to me on Twitter @jamesg_oca and I would be happy to chat.

Heartland Talent Visas

One of the most common pieces of advice that I have heard over the last few months has been that venturing forth to San Francisco would allow me to access new pools of knowledge and open me up to a whole new world of entrepreneurship and innovation. I do not doubt this statement, and as a matter of fact, I intend to move to San Francisco in the near future. San Francisco and the Bay Area is a global startup hub where failure is embedded in the culture and where those who have a different vision of the world are able to explore their passion and develop new solutions to difficult problems they are interested in. The benefits of moving to — or at least visiting — San Francisco are out of the purview of this essay.

The aforementioned advice, while valid, has inspired many people to move to SF in order to explore their dreams. But in the process it has made it more difficult for the U.S. Heartland to retain the talent that it needs in order to reach higher levels of economic prosperity. The United States is the “land of opportunity” and despite the fact that cities such as SF, and New York City get most of the attention, there is still a lot of potential in less startup-oriented areas of the U.S. such as Oklahoma and other such states. Population decline has affected communities in every state, and half of all US states lost strong working-age adults from the period between 2007 and 2017. In addition, 43% of counties in the average state lost citizens in that same time period.

The rising costs of rent and properties in the main tech hubs have pushed many people away from these areas and have made it even more difficult for outsiders to participate in the unique culture which they bring. This shows that these hubs are clearly generating economic value — but at what cost? These costs may discourage people who have an ambitious vision to move to these locations, which will cause the U.S. as a whole to be unable to attract the high levels of talent it previously could, thus losing out on an opportunity to generate more economic value for the country.

Solving this problem is difficult, but one of the ways in which I believe the U.S. could encourage more people to consider moving to non-tech hubs would be to issue a new class of visas — the “Heartland Visa”. This visa would allow people in technology to move to the U.S. Heartland — cities like Chicago, IL, and Indianapolis, IN — and earn the ability to move to the rest of the U.S. after a certain period of time. A Heartland Visa would encourage more people to move to cities that are traditionally not considered technology hubs and would allow those cities to attract the talent it needs to grow and become more prosperous.

My advice would be for US states to be able to grant foreign individuals the ability to move to that specific state, under the condition that they stay there and either start a company or work at a company for a certain period of time. [1]

For the cities, this would mean that even if people are working remotely for out-of-state companies, they would have more potential consumers that would frequent local businesses, and there would be more people who would be required to pay any taxes to the local governments. These people may end up staying in the city even after their visa has expired, and would allow the cities and states offering a Heartland Visa to retain talent for longer which could help generate more value for local businesses. 86% of counties now grow slower than the nation as a whole, up from 64% in the 1990s.

Letting people into the country through a Heartland Visa may also help encourage more entrepreneurs to start up in the US. While working from a traditional tech hub such as SF can help companies get started, there are still many successful technology companies that are not based in one of the large technology hubs in the US. In fact, the TechStars accelerator got started in Boulder, Colorado. These founders would then generate more economic value for the city, and may also encourage more founders to set up shop in the city. For a startup hub to succeed, it first needs a few companies which can show that the location is viable and would provide benefits to the company by starting there. Perhaps one of the largest advantages that cities offering a Heartland Visa have is the on average lower costs of living than places like NYC, and SF, which would help entrepreneurs save money when they are starting their company.

A Heartland Visa would also allow cities to attract the talent they need to become larger technology hubs. If Lansing, MI became known as a place with a good pool of tech talent, more companies would likely move there because it would make sense to go where the talent goes. Imagine how beneficial a small division of Google would be to the city if they were to generate enough value? The one or two successful companies open an office in a Heartland-based city would be the magnet for technology talent, and would encourage more people to follow suit and establish a presence in that city. Portland, OR is a good example of this, in that they have quickly grown to have divisions of Google, and Intel open in their city. While Portland is not in the Heartland, they have demonstrated that talent begets talent.

Heartland Visas would not allow cities to become hot tech spots like SF quickly, but it would create a way for them to be seen more favorably by people looking to emigrate to the US. On a national scale, a Heartland Visa would spread highly-skilled immigrant workers around the country, which means that more cities can benefit from the economic value the tech industry is generating. The states which signed onto the program would increase levels of entrepreneurship in states where tech talent would normally avoid and would give states access to a wider pool of human capital that can help the state become more competitive on the tech scene. [2]

For immigrants, this program would also have a number of benefits. At present, the US immigration system has many inefficiencies which make it incredibly difficult for people to migrate. High legal costs and the complexity of the application forms and requirements mean that many high-potential individuals cannot move to the US due to financial constraints. For those who are denied a visa the first time, it can be difficult to gather the funds they need to file for a second time. The CEO of Zoom, now worth over $16B, Eric Yuan, was refused a US visa eight times even though he was already generating vast amounts of economic value at the time of his application. The program would increase overall access to the U.S. for ambitious immigrants, and would help the most talented people move to the U.S. without as many barriers.

A state-based program would give states more power in the immigration process and would potentially result in changes being made to help ensure that the best talent can easily apply for a visa and emigrate. In addition, a state-based program would provide a flexible and additional pathway for skilled immigrants to enter the US, provided that they make a commitment to a specific state for a certain period of time. A Heartland Visa could become a road to citizenship or permanent residency if the program were to scale, which would incentivize people to spend more time in a particular state and generate more economic value in the process.

Current visas such as the H-1B and O-1 visa have strict requirements, and H-1B visa holders must work for the employer who sponsored them or move to a company who can sponsor a visa extension. Visa sponsorships are normally reserved for larger companies which can pay for additional legal resources in order to hire the best talent from around the world, which increases the inequality of talent across the US. A Heartland Visa would bring the ability to hire better talent to smaller businesses across the country, which would level the playing field and help smaller businesses become more competitive. [2]

The places with decreasing populations generally have residents who are less educated than those in other counties. This causes slower job creation, housing markets to become devalued, and adds additional stress on public funds to help cover the costs associated with talented residents leaving Heartland cities to move to SF and other such technology hubs. A Heartland Visa would make it easier for these cities to retain talent and ensure that local businesses could select the best quality candidate for the job. Ultimately, this will allow them to create more economic value for the entire city and state. [3]

Establishing this program would have a few roadblocks. The first would be determining exactly how these visas would work. Would they be employer-sponsored with a clause that allowed people to change employer assuming they still resided in the state? This would be the most likely outcome to ensure that talented people do not emigrate. Would these visas be co-signed by cities, or the states themselves and sent to the federal government? A new workflow for applying for Heartland Visas would likely have to appear, and while it may be time-consuming to set up a new application process, it is not impossible.

Immigrants have one thing in common — they have left their familiar surroundings in search of a better life. Those that choose to move to the US may have a specific city in mind, but adding the option to move to a state in exchange for a path to citizenship in the near future may help encourage more people to move to the state. States would be able to attract talent, more immigrants would be able to enter the US. The visa would be a win-win for all. The politicians who proposed such a visa would likely gain a lot of support as well in elections based on their work to help reform the education system.

Maybe all that states like Michigan and Ohio need are state-issued visas which would allow them to attract enough technical talent to establish themselves as miniature startup hubs. The cost of such a program would be small relative to the amount the government spends on immigration, and it seems worth it to try a pilot program to assess the viability of a Heartland Visa. It will take a lot of time and effort to work with the federal government to develop such a program, but it would certainly be worth it in the long-term for the states interested in hiring through a Heartland Visa.

Notes
[1] This minimum time period would have to be low enough to allow visa recipients to benefit from everything the U.S. has to offer, but high enough so as to ensure that people do not apply for the visa and then move to another state. I would say that three to five years would be a good amount here, before people could either apply for an extension or apply for permanent residency.
[2] There is also a cap on the amount of H1-B visas that are granted, which varies each year, and larger companies can afford to pay for expedited review which increases the chance that their employee gets approved earlier.
[3] Perhaps these changes will also help cities which are on the rise in technology to grow to the point where they can compete with other tech hubs. Utah, for example, has been developing a vibrant startup scene recently, and a Heartland visa program in the state may help them access the talent they need in order to scale their efforts. Paul Graham illustrated the importance of talent in growing a startup community in an essay here.

The Rise of the Microgrant

What is the most effective way of distributing wealth to ambitious people who have a vision for the world, but need some extra capital to achieve their goals? I have been thinking about this question a lot, especially considering I have been the beneficiary of a grant that helped jumpstart my career in software. One of the most common answers to this question in the human capital space has been through using Income Share Agreements, where people could raise money upfront for their project or education in exchange for a portion of their future income.

This model doesn’t work for a number of reasons. Income Share Agreements, while an effective way of increasing access to education, are offered by institutions and investors who expect a return on their investment. Therefore, if somebody is working on a project that has not yet gone to market, or will take a long time to get approval (for example, in pharmaceuticals or biotech), then they will not be able to earn a return on the ISA for some time, and so investors would be less likely to invest in a person via this security. In addition, Income Share Agreements are also high maintenance and have terms that are consistently evolving with the changing regulatory landscape, and at scale, it would be difficult for someone interested in investing in talented people to maintain the program.

So if Income Share Agreements are not an appropriate method to help ambitious people working on a project raise money, what would be better? Many people have approached this problem from a venture capital standpoint, and have established clear expectations for returns from those in whom they have invested. It is unclear whether or not basic venture economics such as the “Babe Ruth effect” — which venture relies on — would apply to human investments due to the fact that one is investing in a person, not a company. Human capital is poised to become an increasingly more popular space in the future, and while I agree that arrangements such as ISAs have a place in the future, there is another way that we can fund interesting projects at scale. In this essay, I am going to explore the rise of the “microgrant”, and how they can be used as a method to invest in talented individuals.

There has recently been a rise in “microgrants” — small grants issued to a wide range of people which are offered to help people achieve a certain goal or work on a specific project. These grants, issued by institutions such as 1517 Fund and Emergent Ventures, are being used as a way to invest in the next generation of innovators at the earliest possible stage. Because these projects are grants, the beneficiary owes nothing in return and thus can use all of the money as they see fit in order to advance their own education and projects. Microgrants have traditionally been issued by communities and philanthropic organizations for charitable reasons, but they are taking on a new meaning in the human capital space. [1]

The opportunity in microgrants is to make it easier for dedicated people to raise money that can use to finance their ventures, whether it be a new project, a blog, living costs so they can pursue a course, or something similar. Microgrants could be considered “venture capital for individuals” in a way. Right now, venture capitalists invest large amounts of money into companies in exchange for a portion of equity in that company. If the company succeeds, the venture capitalist will earn a healthy return for taking a risk on investing in the company. However, for individuals who are pursuing independent projects or other ventures which are not companies, it can be very difficult to get access to the capital that one needs to pursue their goals. [2]

An important distinction to make would be that while venture capital is invested in a certain company and to be used for a certain purpose, microgrants normally come with no strings attached, which means that people are free to use the capital as they see fit. The main benefit of this is that the recipient can use the money to explore, spend it on their education, cover living costs, and pay for anything else which may help advance themselves, in addition to the project they are working on. A common purpose for many microgrants today is to travel to San Francisco or other such reasons because of the significant benefits associated with experiencing the SF culture and all it has to offer.

The fact that most microgrants come with no strings attached means that the money can go to the areas where it will make the most impact, and the recipient will likely be very thankful for receiving a grant which helps them not just in their project, but in their life too. Consider this: if you are about to move to NYC to work for a tech startup and you raise money to help you move to pursue the opportunity and to help you start a side project, that money can go to covering all associated moving costs which means that you can have a smoother transition and focus more on your work and side project.

The most valuable ideas to start with are not usually venture-backable anyway because they are in such a nascent state and not enough progress has been made to demonstrate their viability at scale. Microgrants allow innovators to focus their resources on showing that their idea could work and thus can generate great economic value if they are successful. The microgrant may help them build a prototype which they can show to investors and perhaps raise a venture round to finance their expansion. In areas such as VR/AR, biotech, pharmaceuticals, and other industries with high up-front research and development costs, microgrants can help accelerate the development of these projects and get them to the point where they can raise more money. Microgrants could be considered a pre-pre-seed round — invested in the individual to help finance their personal and project’s expansions.

In addition to the capital raised, grants present a variety of networking opportunities for both the grantee and the investor. The most prominent being that a mentor-mentee relationship will likely be formed between both parties and a culture of celebrating wins and collaborative working will be developed. As the grantee succeeds, the investor will also benefit from the sense of liberation and accomplishment which one gets from helping someone grow. Microgrants allow people to invest in someone at the earliest possible stage, and the grantee is likely to keep in constant contact as they succeed. The people that believe in someone from an early stage hold an important part in somebody’s life, and microgrant allows even more people to benefit from that effect.

The capital aspect of a microgrant is only the means by which someone will finance their projects, it is not the entire benefit of the grant. Committing a small portion of capital toward helping a person succeed can help raise their aspirations and encourage them to think bigger. There is a very powerful effect that exists with microgrants in that giving capital to someone, even if it is a small amount, can signal that somebody believes in the work they are doing. For an ambitious young person who is still trying to figure out what to do with their life, this can help them reaffirm their passion and can provide them with the validation that they need to reach their full potential and generate more value for society.

As a recipient of the Pioneer grant, the fact that somebody believed in me enough to invest money in my future ventures gave me the encouragement that I needed to continue in the direction I was going, which has thus far proved to be the correct path. There is a real opportunity for microgrants to be issued to “free learners” as well or those who are pursuing education on their own terms in the areas that they feel passionate about. Investing in these people allows them to continue their educational journey and the capital aspect of the grant can help them sustain their lives while they embark on their unique educational journey.

Critics of microgrants have made comments regarding the effectiveness of the grants due to their small size. The majority of these critics are generally speaking from a position where they have access to all of the capital that they need for their lives, and do not fully understand the benefits that even a small amount of money can provide to a young person. For most 16-year-olds, a $5,000 grant would be considered a very large amount of money, and that would go a long way to helping them discover the path they want to take and would help them get their project off the ground. These grants can have a massive impact on the beneficiaries because they are being made at a pivotal moment in a young person’s life — they have a passion and a vision for the future, but need capital to help bring their idea into fruition. Although for some, microgrants may be ineffective due to the large upfront costs of their project, but for most a small grant is all they need to get started.

In 1992, George Soros led a community of Russian scientists to stay in the field after the USSR collapsed. Soros made $500 grants to over 28,000 basic scientists who showed potential to write quality work in the future. At the time, these $500 grants were a large amount of money because of the unstable economic conditions that the people were facing. The result was that most of these scientists published around five papers or reports for the next few decades after receiving their grant. Soros invested money to help these people get off their feet and gave them the capital they needed in order to pursue independent research on their own terms. The grant recipients generated a significant amount of value over the following decades, which can be largely attributed to the grants that they received at the time. This shows the potential of investing in people who show potential at a large scale, and also indicates that these arrangements have been present for a while.

More recently, grants such as Pioneer, 1517 Fund, and the Thiel Fellowship have been founded which aim to invest in passionate young people who are working on a project and need capital to continue to build and scale their project. These grants operate on the premise that by investing in people at a young age, they can help encourage young people to take bigger risks and explore entrepreneurship as a potential career path. The Thiel Fellowship, for example, believes firmly in the fact that if people are given enough freedom then they will be able to generate more value and do more meaningful work than they would otherwise be able to do in a traditional institution. These grants also have one thing in common — they believe that everyone has a different path and should be given access to the resources they need to succeed. Thiel Fellows have gone on to start successful companies, and Pioneers and 1517 Fund grant recipients have realized that same effect. [3]

An understated value of microgrants is the value add that they provide to their recipients, aside from the capital. More microgrants are now being distributed with added services, such as mentorship, access to resources or credits, and the ability to access a community of grant recipients. These added services are provided because of the concept of aligned incentives — the more each portfolio individual succeeds, the better the public perception of the grant. For many individuals, especially those without an established network, being able to receive mentorship, as aforementioned, from an expert in a subject matter they are pursuing can be a very powerful motivator. The grant issuer may also open up their network to help the young person interact with those who can advance their project. In addition, the resources provided such as cloud credits for people building compute projects can help ensure that all of the money from the grant is redirected towards useful aspects of the project and personal development, rather than being used to cover cloud costs or any other resource costs which can be very high in some industries.

Another important aspect of microgrants to consider is the community value that they provide. Pioneer has likened their platform to the online version of the Ivy Leagues, and exploring the leaderboard and reviewing weekly updates is the digital equivalent of comparing notes and sharing ideas. Other microgrants also have this effect where recipients have access to a community of ambitious people working on a diverse range of projects. For the people that may not have a well-established technical network, the community of fellow grant recipients can allow people to participate in more intellectually stimulating conversations and seek help from people who are experienced in the areas they are working on. Even those who do have a network can still benefit from being able to explore in-depth ideas outside of their specialized subject matter, and can thus broaden their horizons while participating in the grant.

This is amplified by the branding of microgrants which could become more important as the concept is explored in more depth. Students in academia can drop the name of their college which affords them access to a variety of different resources — alumni communities, for example. Stating that one went to Harvard or Yale is a good signal of the quality of institutionally-provided work that they can generate. The same thing applies to companies. Alumni of Y Combinator, TechStars, and other startup accelerators have access to more communities because of their status as an alum. In the future, microgrants may have a similar branding effect where they become a signal not of an individual’s accomplishments in academia or company-building, but rather in learning about and exploring projects in the area they are passionate about. The status of being a Thiel Fellow or a Pioneer has already illustrated the strong community and branding value of grants — albeit larger grants — which sets a strong precedent for the potential that microgrants have in this area.

Microgrants are also an interesting human capital solution for the reason that there are very low barriers and costs for entry and maintenance. Income Share Agreements, publicly traded people, and other human capital investments have high up-front entry costs and can be very expensive to maintain at scale. ISAs especially require larger legal and accounting departments to run at scale, and as more contracts are issued, even more issues arise. Microgrants, because they can be managed and maintained by a single person or two, do not suffer from such limitations because there are very few maintenance costs (taxation exemptions may even apply), which means that an individual program can scale more effectively. Although microgrants should stop operating after all of the capital has been invested in people, this scale effect still applies in terms of general management throughout the duration of the fund.

Despite the low maintenance costs, there is one major limitation that would prevent wide-scale adoption of microgrants — the quality of grant-givers. The success of grants such as Pioneer and 1517 Fund can be in part attributed to the network of the founders and their willingness to devote their own time to help recipients. Microgrants can help even more people access new and exciting opportunities, although this effect will be limited based on how many people meet the aforementioned profile. Grant funders need to be experts in their field and have the capacity and technical knowledge required to help their recipients (or at least refer them to someone who can), and must have a strong enough network in order to attract the best talent, which will make the program worth the time. Future grants that are started by people without a strong enough network and limited technical capabilities may stunt the growth of recipients because many of them will depend on the grant giver for assistance and advice on their road to success.

In sum, Microgrants present an interesting way in which we can deploy capital towards meaningful projects while being able to invest in the potential of future innovators. There are many people out there who have capital which could be invested in new ventures or charity, and microgrants present a way in which every single dollar invested would go straight to people who have demonstrated their potential and are looking for capital to scale their work. Microgrants allow anyone — not just philanthropic organizations — to invest in people they believe in, and give them the capital and mentorship they need to generate more economic value and reach their full potential. Microgrants also present one additional value for the grant-giver — people never forget those who believed in them at their earliest stages. This effect is immensely powerful and may encourage more people to get involved in this form of human capital investments. Human capital investing is becoming increasingly popular, and the rise of the microgrant is only one part of this emerging trend.

[1] Tyler Cowen, operator of Emergent Ventures, a $4.5 million grant fund, has penned an article regarding the philosophy behind the program, and how microgrants and grants may be a more effective method of philanthropy. Nadia Eghbal, the former operator of the Helium Grant, has also written about her experiences running the program and the low maintenance costs associated with starting a fund here.

[2] Perhaps in the future grant givers will adopt the identity of venture capital for individuals, because the success of their grant will depend on the quality of applicants. It is also worth noting there is an incentive for grant givers to invest a lot of time in reviewing and vetting applications. Grant givers will want to be able to say that they funded people who have started large companies or were co-creators of a revolutionary new science paper, and will help them attract “deal flow” (new and better applicants). Deal flow begets deal flow.

[3] Past portfolio individuals of the Thiel Fellowship include the founders and CEOs of Figma, the collaborative design tool, Ethereum, the blockchain-based technology, and Luminar, a company that develops high-performance LIDAR systems.

Grant Opportunities for Ambitious Innovators

Around the world there are many passionate innovators who have an idea for the future, and need some support in order to achieve their goals. These people are journalists, entrepreneurs, scientists, and everything in between, with one thing in common — they are ambitious and have the drive to pursue a project that could make a difference. Some of the best entrepreneurs and innovators in the world have came from non-traditional backgrounds and countries — Elon Musk was from South Africa before moving to Canada, Albert Einstein was a clerk for the Bern patent office. The people who will develop the future are globally distributed.

There are a number of grants, fellowships, and other opportunities available to ambitious young people which aim to democratize access to opportunity, so that everyone who is passionate about a particular area can explore it in depth and create their own futures. These opportunities bring a number of benefits such as access to some capital to pursue a project, the ability to visit San Francisco, access to a community of those who subvert the norms, among many other things. As a recipient of the Pioneer grant, and someone who has worked with people who have got their start with some of the opportunities mentioned in this article, I can personally attest to the benefits these programs bring.

In this article, I will explore three of the most popular grants, and share a list of similar opportunities available to entrepreneurs and other ambitious innovators.

Pioneer

Pioneer is a monthly contest for the “ambitious outsiders” of the world, to help them turn their ideas into a reality. The aim of Pioneer is to identify the “lost Einsteins” of the world and help them access the resources they need — funding, mentorship, and a strong community — in order to thrive and achieve their goals. Founder of Pioneer, Daniel Gross, has referred to Pioneer as a “vehicle for scaling Californian optimism, thinking and culture”, based on his interactions with participants.

Pioneer is unique to other grants in that it does not leverage an application process to identify talent. They have created a leaderboard which showcases the most hard-working participants which changes as participants, Pioneers, and experts vote on weekly status updates. The program asks that participants submit weekly progress updates which outlines their goals for the next week, their past achievements, and what they need assistance with, and the more progress they make, the higher their rank will be on the leaderboard. Pioneer is attempting to build an “Ivy League campus” for the internet, where people from around the world can come together and showcase and share their ideas and projects, and help others succeed in the process.

Terms: Pioneer selects a few dozen participants each month from the tournament to become “Pioneers”. These people are eligible to receive a $1,000 grant to spend however they want, $6,000 in Stellar lumens, mentorship, a round-trip plane ticket to Silicon Valley for a trip with other Pioneers, among many other things. Pioneer also reserves the right to invest up to $100,000 in Pioneers’ projects if they become companies and start to raise capital.

The Thiel Fellowship

The Thiel Fellowship, founded by a co-founder of PayPal Peter Thiel, is perhaps the most well-known grant opportunity available to young entrepreneurs. The Thiel Fellowship gives ambitious young people $100,000 who want to build new things and learn by doing, instead of sitting in a classroom and learning in a traditional environment. The Thiel Fellowship’s value prop concisely describes why the fellowship exists and what they invest: “Two years. $100,000. Some ideas can’t wait”.

Thiel believes that when people are given enough freedom, they are able to work faster and smarter and produce greater results. The fellowship invests in people who are looking to pursue a non-traditional path and who have a vision for the future that they would like to develop. There is no requirement to be working on a specific company, although applicants must be able to demonstrate progress toward some goal — macro or micro. Participants in the Thiel Fellowship can access the wide network of founders and Fellows the fellowship has cultivated, and are given access to numerous different opportunities to grow and develop their products.

Terms: The Thiel Fellowship is a two-year program for young people aged 22 or younger who want to build new things. Thiel Fellows are required to drop out of high school or college in exchange for receiving a $100,000 grant and support from the fellowship’s community of other Thiel Fellows, founders, investors, and more. There are no location requirements in order to accept the fellowship, and they accept around 20 to 30 Fellows each year on a rolling basis.

1517 Fund

1517 Fund invests in companies that are led by young founders. The fund makes grant, pre-seed, and seed investments into founders who are working on technology projects or startups. They focus on ambitious young people who are interested in subverting the norms and pursuing their own path, because “the path geared towards higher education is not for all”. 1517 Fund provides people with the capital that they need to explore subjects they are interested in, and helps them turn their ideas and projects into viable companies.

The 1517 Fund team includes people who formerly worked on the Thiel Fellowship, and have a wide range of skills in a variety if different subject areas. 1517 Fund are interested in investing in people — not companies — because they believe in working with the people who can create the future and those who are looking to pursue difficult problems with a unique solution. The team likes to hear from founders before they are ready to raise capital or receive a grant and believe that by developing strong upfront relationships they can provide better support to founders at every stage in their journey, and help them determine their next course of action.

Terms: 1517 Fund invests $250,000 for founding teams in their seed round to help them accelerate their project and develop their company. They also offer $1,000 grants to ambitious entrepreneurs who have an idea and need capital, but are not necessarily ready to raise venture capital or an official round. They promise to Venmo over the $1,000 grant to anyone who they feel is working on something interesting that could become a company in the future, and many grant recipients have gone on to raise further capital with 1517 later on in their journey.

Other Grants

There are a number of other grants and opportunities which young entrepreneurs can leverage. Some of these are not specifically targeted towards younger innovators, although are still great opportunities for those interested:

The grants and opportunities mentioned in this post are allow young entrepreneurs who are passionate about a particular subject matter to get access to the capital and mentorship they need in order to pursue their own track. These opportunities were all designed to help tap into the untapped talent around the world, so that all of the ambitious thinkers around the world can achieve their goals and work on issues that they are interested in.

The money raised from some of these grants has helped dozens of people from around the world explore their dreams and has been their stepping stone towards doing greater things. For those who are interested in pursuing a project in more depth, or are interested in following an unconventional path, these grants are a perfect fit.

If you are interested in non-technology grants, or are looking for summer programs, competitions, and other opportunities, this article covers more of these. Nayafia also explores both micro and smaller grants here. If you think I have missed anything, please reach out to me on Twitter @jamesg_oca.

My Thoughts on “Human Capital”

Over the last few years we have seen a number of ambitious projects that look to improve access to opportunity, and help people achieve their full potential. Lambda School is offering a high-quality education in computer science, financed by a portion of your future income. People like myself and Mike Merrill, have issued shares in themselves which are available for anyone to purchase.

Life capital includes any project that looks at tapping into the vast amount of human talent available in the world and helping people reach their full potential. Access to talent is universal, but access to opportunity is not. Human capital experiments are attempting to address this problem in creative ways to help high-potential individuals use their skills to make a difference by introducing them to the opportunities they need to thrive.

This could come in the form of pooling your future income with friends, selling shares in yourself, paying for your education through an ISA, or anything that helps access the potential of ambitious people who could make a bigger impact.

To continue the conversation further, I wanted to analyze in-depth the different ways in which we can look at human capital, and what has already been done as part of this movement. I will cover the proliferation of ISAs, the potential of publicly traded people, and what these have taught us about human capital.

Publicly Traded People

Last November I listened to an episode of Village Stories featuring Mike Merrill, a man who had been “publicly traded” since 2008. He had relinquished a large amount of control in his life to shareholders, who advised him on matters both personal and professional. The concept of publicly traded people interested me so much that I decided to reach out personally and find out more about the project. The idea is that a human would issue shares in themselves, like a company, and offer shareholders the ability to earn a return if they advise the person successfully.

The end result of my research was my decision to become a publicly traded person. I sell shares in myself in exchange for the ability to vote on decisions in my life. So far, shareholders have voted on everything from my starting a pescatarian diet, to how I should manage my social media presence. My motivation behind becoming a publicly traded was simple – I was interested in leveraging the power of community. Merrill described his being publicly traded as “Community Through Capitalism”. Through this project, I have been able to cultivate a loyal community of people who are literally invested in my success and have ultimately helped me make better decisions.

The beauty of the concept is that shareholders have a financial incentive to help the person succeed. If they provide their investment with advice that has a positive impact on my life, the person’s share price should appreciate which will result in a profit for the investor. The opposite is also true, which reduces the risk of bad actors who are only interested in profitability. If the investment is not happy and productive, then they can not yield a profit for shareholders. This reduces the risk of ethical exploitations of the system and “shorting” stock because the actions of the shareholders are directly correlated with the success of the investment.

Being publicly traded allows anyone to develop their own community, using the power of capitalism and the model of the stock market to create an environment where people could invest in their future, and earn a potential return for doing so. Whenever I need advice, my first call is to a shareholder, who is willing to give me a few moments of their time and help guide me on the right path. This model has offered the ability for one to cultivate a community where incentives are aligned, which has resulted in shareholders being proactive and always happy to provide me with advice as what’s good for me is good for them.

My Shareholder Questions at https://www.jamesg.app

Another advantage of being a publicly traded person, which is not so obvious, is that it inspires a change in mindset. As a publicly traded person, I have felt an increased sense of productivity and accountability because my shareholders rely on me to make progress so that they can yield a return. I feel like I need to demonstrate progress on a weekly basis to showcase my potential to shareholders and renew their confidence in me, which helps me work at my best and maintain a low level of stress to propel myself forward.

There is, of course, a negative side to this – being publicly traded could impose on one a high level of stress. The commitment to transparency that is required in being publicly traded could result in people becoming too stressed and fantasized with profitability over their happiness, which is why the model is incompatible for many people. Instead, I believe that we can learn from the project and take the financial incentive for investors, and adopt a mentorship-based model rather than a decision-based model. Avenify, who allows you to invest in people’s college through ISAs, have realized this and adopted a model based on financial returns, rather than personal involvement.

I have also observed a rather interesting trend – shareholders are less interested in the monetary returns of investing in a person. The majority of my shareholders have not sold their shares in me, and are interested in guiding my success in the long-term, rather than the prospects of short-term gains. My shareholders understand the responsibilities associated with investing in a person and believe that the experience of being able to guide a young person on the right path is liberating and more important than the potential financial returns.

One of the major problems with this concept is that it requires a lot of commitment – although that may also be a good thing. I feel that the concept of publicly traded people offers a lot of benefits, but surrendering control over some of your decisions feels like a big risk for many people. Imagine a platform that allowed you to invest in people through a non-stock market system, but still offered financial returns through a model like an ISA – a Kickstarter for people platform. I can see this becoming the next big thing in human capital. Upstart tried this a few years back, but there was not enough demand for the idea to advance, and they ended up successfully pivoting to loans.

A bigger issue to consider is the ethical ramifications of issuing shares in oneself. Can one’s contributions to society truly be measured by a single figure in the form of a share price? Many people are reluctant to invest in people through a publicly traded person model because they do not believe that any number can accurately represent somebody’s contributions to society. Perhaps assigning someone a number would be demotivating and make them feel as if they are not contributing enough. The overall question for your contemplation is: Should we actually be tokenizing people, from an ethical standpoint? When asked about this question, one of my shareholders replied the following:

“As an investor in a publicly traded person, I’m always thinking about the ethical implications when voting on decisions that will impact their lives. Is this the right thing to do? What are the long term implications? Companies can recover from bad decisions, but human beings are different.”

This effect would be amplified if a lot of people adopted a similar model, or if a platform based on trading tokens in people (this would most likely happen through using cryptocurrencies) was to make the concept more mainstream. People would consistently be comparing their share price to that of others and may result in a decreased state of productivity, fear over their contributions to work and society, and overall make people feel as if they are not achieving as much as they should.

Personal Boards

One of the less formal ways one can explore human capital is through the concept of personal boards. This already happens informally, where you will develop your own personal community of people with whom you interact on a regular basis, but there is an opportunity for this to be expanded to have a wider definition involving mentorship.

A personal board is a community of a few people with whom you keep in the loop about your life, and communicate frequently. These people act as your advisors who are willing to get involved in the intricacies of your life and help you understand the barriers you are facing and overcome them. You could invite experts, your friends, family members, mentors, and anyone else who you believe would be able to contribute to the discussion, and introduce them all to each other, so they can help you make decisions based on their collective experience working with you on both a personal and professional level.

This could be through a formal arrangement where you meet on a predefined basis and establish and review your personal Key Performance Indicators (KPIs), or through a more informal setup where you send a monthly email to board members and ask for advice when you need help. For this model to be effective, establishing KPIs would be necessary so that progress can be compared between meeting and detailed plans can be drawn up about the future direction of a person’s life.

This concept could also experiment with ISAs, where those who participated on someone’s personal board could earn a small portion of their future income in exchange for their advice. Furthermore, a person could offer the ability to invest in their next company through pro-rata rights to their personal board, further incentivizing their board to provide them with more in-depth and actionable advice about their life.

In fact, people that want to participate in personal boards may opt to not take any compensation for their services. If someone wants to mentor you, they may prefer to feel as if they are having an impact on the life of an ambitious person than the potential financial returns that they stand to gain. An environment based on sharing success and collaborative improvement and iteration would thus form, reducing the risk of bad actors influencing your decisions, as present with the publicly traded person model. The ethics of developing a personal board are also less concerning, as you would be able to select the people whom you believe would have the greatest impact on your life, and you would retain full control over the process.

Income Share Agreements

Income Share Agreements, or ISAs, are a legal document which offers a debt-free alternative to loans. ISAs allow a student (or lender), to receive interest-free funding from an investor. In exchange for this, the lender agrees to share a percentage of their future income with the lender, normally on a monthly basis. Income Share Agreements have the potential to completely disrupt the student loans industry and could have wider applications that allow people to pursue their own education, regardless of access to capital which was previously a major barrier.

Lambda School, A Revolutionary School That Invests in You

Perhaps the most popular example of ISAs being used successfully is Lambda School, an online boot camp that trains students to become software engineers without paying any money upfront. Lambda allows their students to pay 17% of their income for the first two years that they are in employment, capped at $30,000. This only comes into effect when the student is making a minimum of $50,000 in income. Students can also pay $20,000 upfront if they would prefer.

This model has allowed Lambda to offer students a professional education in computer science without requiring them to have money to pay for it upfront. By using an ISA, students who do not earn over $50,000 after Lambda School will never have to pay for their education, which aligns the incentives of both students and Lambda. If Lambda School helps them get employed in a career in software engineering, they will earn a return. However, if they do not, then the student will have to pay nothing back – the ideal scenario. This is fundamentally different from the traditional student loan model, which requires people to pay back money, regardless of their income or job.

ISAs have the potential to completely disrupt the way that we finance education. By offering a portion of your future income in exchange for your education, people do not have to worry about incurring debt and the costs associated with that debt. Students would no longer have to worry about the burden of finding work to ensure they don’t default, and would not have to carry the thought of how much money a job would make when they are making choices about their career.

According to Karthik Krishnan, an associate professor of finance at Northeastern University who specializes in student debt research, a person with $30,000 in student loans is 11 percent less likely to start a business than a person who graduated without incurring debt. ISAs offer a way to finance your future without incurring debt, so people are free to pursue whatever path they want — whether that be in terms of a future full-time job, internship, or starting a business — without having to find a way to finance their ventures and pay for the debt they have incurred.

Outside Applications

Another interesting angle to ISAs is how they can be applied outside of traditional education. Imagine if you were to sign an ISA with your most influential teachers at high school or in college. If they helped you succeed, they could earn a portion of your future income. This would provide them with a financial incentive to be more hands-on and engaged, and overall provide you with a better educational experience. If you turned out to be the next Elon Musk, the teacher would profit nicely for their part in your success.

There is also the possibility that you use ISAs with your friends. If you are working on an essay or a blog post then your friends may offer to help by writing comments, but they may only look at it for five minutes. If you had an ISA with them, they would have a financial incentive to help you succeed, and may, therefore, spend more time reviewing your essay, and schedule a follow-up call with some feedback on how you can improve. This could even extend to managers at companies, who could earn more money if their subordinates earned a promotion.

ISAs could also be leveraged to create an index fund of people, or an Exchange Traded Fund (ETF), which would allow you to diversify your portfolio in one investment as the fund would be tied to the success of a group of individuals. Aside from the diversification benefits, an index fund for people would also reduce the risk of borrowers worrying about their success as if they have a down month, then investors can still yield a return based on the aggregate result of a group of people.

As aforementioned, Income Share Agreements could also pave the way for a “Kickstarter for People” platform, that allowed you to invest in the people you believe in — entrepreneurs, designers, salespeople, artists, et al — for the potential of a return. A “Crowd ISA” model could be developed, based on the same fundamental principle as the “Crowd SAFE” (Crowd Simple Agreement for Future Equity) used by Republic for startup investing, offering the ability for a community of people to earn a percentage of someone’s return proportional to the size of their initial investment.

Financial Markets

As highlighted throughout this article, one of the most interesting aspects of human capital experiments is the financial returns that it can yield.

There are, however, some downsides to tokenizing human capital. The first, prevalent in both Income Share Agreements and selling shares in oneself, is the potential rise of secondary markets wherein people trade stakes in other people without their knowledge until the trade is done. This is very common in the real estate market and primarily used to liquidate capital as soon as possible so lenders can issue more loans.

A secondary market would allow for people to potentially validate stereotypes and run data analysis on who can generate the highest returns from a statistical basis, meaning that the market would become less about people raising money, and more about capitalists attempting to earn a strong return, to the detriment of the people who have actually raised money through an ISA or through share issuance.

This presents the opportunity for people to end up holding a stake in someone’s future success who may not have their best interests at heart and may, therefore, provide poor advice to maximize their profitability, rather than their happiness. In addition, a secondary market would allow people to get in on missed opportunities and be able to participate in the journey of a person who has already demonstrated success but need a little boost to reach their full potential.

On the other hand, a more official and regulated secondary market for shares in people or ISAs would mean that those who hold a stake in one’s future success could trade that stake to someone who could provide them with better advice. This would mean that if someone could not help the person they had invested in, they could instead refer them to another person who could accelerate their success by providing advice, opening up their network, or acting as a mentor.

Selling an ISA or a share in someone may also be perceived as a sign that the lender no longer has confidence in their work and ability to become successful. This may, therefore, cause people to optimize for profitability rather than pursuing their dream career, which would ultimately harm the person who chose to pursue an ISA as a way to access more freedom. In addition, selling an ISA may also bring additional complexities to the process, including legal changes to contracts, due to the unclear regulatory environment at present.

There is also the ethics of this to consider. Trading a share in someone’s future success on a secondary market would allow people to essentially exchange shares in others without their knowledge until the transaction is complete. People would be able to sell their stakes in others without requiring consent, which not only introduces more risk for a person to hold, but may also cause additional ramifications if the investor does not care about the person’s success, but rather profits.

Slavery and Involuntary Servitude

Throughout this post, some of the most prominent ethical considerations in trading human capital have been addressed, however, the question of indentured servitude has not yet been addressed. The argument is that by purchasing a share in someone, you would be able to wield an unnecessary amount of control over them, and thus cause them to perform actions that they otherwise would not provide. Patri Friedman highlighted these concerns in a thread about the prospects of a secondary equity market:

https://twitter.com/patrissimo/status/1110953770458873856

https://twitter.com/patrissimo/status/1110953770458873856

To address this argument for ISAs, it is important to understand that they do not actually entitle the investor to decision-making control or other authority in a person’s life, and also do not allow them to claim any assets if the person does not yield a return. Therefore, ISAs cannot lead to slavery or other forced work because the document does not give this authority to the investor. Most, if not all, companies that are offering ISAs follow industry-determined best practices and have integrated provisions to clarify the role of the investor in their life.

In terms of being publicly traded, this argument is more prominent. In the current form of being able to influence one’s decisions, the problem of slavery is the first thing people think about when they consider the negatives of the model. Theorist and philosopher Steven Lukes defined three faces of power, and the second face (the “open face of power”) addresses this argument really well. It states that the person who has control over the agenda — the person that sets the terms for a decision — therefore have the most power as they decide what other people can decide upon.

Tokenizing people and offering decision-making power is one of the major components that make the concept of publicly traded people really interesting. You can invest in people, and that allows you to help inform their decision making in a formal way, allowing you to guide them to success and happiness. However, the person who is publicly traded can choose the form of the experiment, the questions being asked, and whether or not they are binding, as a condition of investors’ pledging money, which means that slavery cannot occur.

The important thing to note is that while human capital solutions like personal boards and ISAs have the potential to grant someone a portion of their future earnings, they do not represent an actual stake in the person. While ISAs and such are compared to equity, that is in part due to the fact that no money is borrowed, and does not constitute a legal share in that person. When legislation is enacted that addresses ISAs, there will be provisions included to ensure that all ISAs meet ethical standards and offer strong consumer protections.

Regulatory Landscape

The regulatory landscape of ISAs and other solutions such as equity investing in people is unclear. However, ISAs offered by companies like Lambda School, Pathrise, and others using the model, all operate under strict best practices and are legal under current U.S. law. These companies take into account the issues with ISAs and have implemented strict consumer protections and disclosure requirements in order to provide a strong experience for both themselves, and the people in which they are investing.

This is all changing, with Income Share Agreements becoming more common. The Investing  in Student Success Act” has been proposed in both the U.S. House of Representatives, and the Senate, which aims to regulate ISAs and clarify their definition under the law. This act would exclude ISAs from the classification as debt instruments, and instead treat them as education loans, which would mean they cannot be discharged in the case of bankruptcy.

The bill, if enacted, would also establish a set of standard terms which must be included to protect the person raising money, and require issuers to offer consumer protections, and offer fair terms as deemed by the government. The act also excludes ISA issuers from complying with the Investment Company Act of 1940, meaning they would not be subjected to the strict regulations and disclosure requirements that investments firms most follow.

Following firmer regulations, the ethical questions surrounding human capital solutions will become less prominent, as there will be specific legal protections that ensures that people cannot be exploited through offerings such as Income Share Agreements. There has not yet been much action by other governments in regulating ISAs, although this can be attributed to the fact that most ISAs are currently offered in the U.S. only, and the document is yet to be explored in other markets (although this does offer some exciting opportunities for the future).

Closing Remarks

Over the next few years, we are most likely going to see more ambitious projects that look at securitizing and tokenizing human talent. There is an unlimited amount of untapped human potential available in the world, and there is now a community of dedicated people working on trying to ensure that people have access to all of the opportunities they need to thrive.

Whether it be through Lambda School and teaching people how to code, or being a publicly traded person and inviting people to help you make decisions, life capital solutions will offer great opportunities to unleash the full human potential in the future. There are a lot of people who are taking these models and expanding on them further in order to make investing in people more efficient through a plethora of different methods.

This space is constantly growing, and every day there are new players coming into the market. If you are building anything in this space or would like to talk more about life capital, please reach out to me on Twitter.

For further reading, check out this article by Erik Torenberg where he does a deep-dive on ISAs and human capital, and this article by Avenify, which explores the past, present, and future of Income Share Agreements.

Exploring Personal Boards

All companies have a board of directors, a group of individuals who represent the interests of shareholders in the company. This board is tasked with making strategic business decisions, ensuring that the company is properly managed, and making the final decision on things like executive hires and fundraising rounds. Overall, the board of directors plays a critical role in managing a company.

Recently there has been a trend to build your own “personal community”, the group of individuals with whom you interact on a frequent basis. I have been thinking about how we can extend the concept of a personal community to a “personal board of directors”, a formal board of individuals who can help you make major life decisions and help you navigate through difficult events and experiences in your life. This article will serve as an introduction to this concept, and how I would structure my own personal board of directors.

Unpacking Personal Boards

The concept of publicly traded people is being explored in more depth (I am also a publicly traded person). Essentially, you offer shares in yourself in exchange for allowing people to help you make decisions in your life. While this model does bring significant accountability and motivational benefits to the publicly traded person, many people are unable to commit to the level of transparency needed in order to maintain their status.

Personal boards are a group of around 6–12 people who help you make more informed life decisions. Whether you are deciding on a career transition, whether to pursue a new relationship, start a new project, your personal board would be available to provide actionable advice based on their experience with you. While we already develop mentorship relationships with people across our career, a personal board offers a more formal arrangement that prioritizes information-sharing, accountability, and decision-involvement.

Throughout life individuals are tasked with making a series of large decisions that fundamentally impact their future, and many people do not have the information they need to make an informed decision or need an outside opinion before making a final decision.

The aim of a personal board would be to help people get instant advice on the decisions that they are faced from people who have close experience working with the individual. These people will have a special insight into your life, whether they have been a co-worker, a role model with whom you work with, your friends, or someone who can offer an informed perspective into your life. By involving these people in your decision making, you can be exposed to a plethora of new ideas and opinions on the decisions that you are making, which can help you analyze an opportunity from all angles and understand how the people you care about think about it.

Why start a personal board?

One of the most important benefits associated with starting a personal board of directors is that you can get honest and actionable advice on your future. Your personal board exists to advise you on your future decisions and help you navigate any opportunities or challenges that you are faced with. Because they care about you succeeding, they will be more likely to provide unfiltered and honest feedback on your life and a specific decision. This means that you can further analyze a potential decision and benefit from an honest perspective, rather than an opinion that takes into account solely what happens if you fail.

This benefit can be further amplified by building a diverse board. If you develop a diverse board of directors then you can realize a large number of different opinions on particular issues you are facing. This means you can be exposed to new cultural input on a potential decision, as well as how it would help you in the future from a community and networking value. In addition, diversity brings exposure to new ideas and concepts. Therefore, developing a diverse board of people with different backgrounds and characteristics will help you better unpack a particular decision and ultimately make a more informed choice.

In addition, developing a personal board allows you to benefit from more accountability in your work. Your board will be very interested in seeing how your progress in your life, from the success of your decisions to the progress you are making at work and on your projects. Members of your board will likely want to get more involved with your day-to-day life and will check-in more frequently than a mentor would, which will help you stay on track and do all of the work that you hope to complete.

Personal boards also provide you with a concentrated source of motivation. Your board will check-in with you frequently and are interested in seeing you become successful in your life, which is most likely the reason that they are on your board in the first place. Your board members will help encourage you to do the work that makes you feel happiest and be there if you are ever doubting your abilities. If you face a roadblock, then your board will be able to help you overcome it and help you realize the impact that the work you are doing could have on your life, and potentially the world.

Another benefit of operating your own personal board is that you will be able to grow your network quickly. As your board develops, you will most likely start to ask for warm introductions from board members to people who can help you become more successful. These introductions will allow you to cultivate strong relationships with people you are interested in, and benefit from the wisdom that they can provide you.

This benefit would be especially useful if you are a young person looking to break into a career. Your personal board would be able to make meaningful introductions to people who can help you learn more about breaking into your desired industry, and may even be able to help you network with prospective employers. This can be coupled with the advice that board members can provide you with regards to your future career and how to navigate the interview process to provide you with an unfair advantage over other candidates.

Starting a personal board also opens the opportunity to bring all of the wisdom from people who are most familiar with you into one room (or remote chat, for that matter). This means that you can benefit from the collective advice that they devise based on their experience with you, and allow your board members to discuss your direction in a collaborative chat — which can yield more insightful advice on the end.

Your personal board will also be available to provide you with peer-support throughout your unique path. Whether you are starting a new project, considering a career change, or contemplating a change in diet, your personal board will be there to provide you with in-depth mentorship and advice that can help you make a more informed choice. Pitching your ideas to your board will also help you approach a decision from a new angle, and consider in more depth how it could impact your life, in collaboration with your shareholders.

Every board member will have a distinctive talent to bring to the table. Your friends will be able to provide motivational and personal support, your co-workers will be able to provide you with professional support, and experts will be able to provide you with a broader perspective on your life and a specific industry. Starting a board has a low barrier for entry, so you can get started right now.

Starting a Board

Before starting a board, you should first talk to people that you already know. This is important as being on a personal board is a big responsibility and you want to make sure that they feel comfortable with you before accepting the position. The first thing that you should consider when starting a personal board is the value that you can provide them and the value they can provide to you.

Your personal board will consist of two-way relationships with board members and yourself. Therefore you should ensure that you elect board members who can provide you with detailed and useful advice that is relevant to your life at the present moment. For example, if you are pursuing a career in software engineering, you should ensure that you have at least one board member who has experience in this industry. In addition to them helping you guide your way into a career in the industry, you will be able to talk with them about their job and allow them to share their own deep knowledge and wisdom, which will make them feel more valued as a board member.

Furthermore, your board should consist of people who work in your respective field. This means that you can benefit from perspectives based on the intricacies of the industry that you are working in, and understand how you can prepare for any changes in the industry. For example, if you are a full-stack web developer, then electing a web developer for your board will allow you to ensure that your decisions make sense from a logistical standpoint and are more informed. This will ultimately allow you to make more informed decisions.

You should also consider inviting a friend to be on your board. This means that you will have someone who can provide you with advice based on their day-to-day experiences with you, and who can guide you in the right direction based on your past behavior and patterns. However, your friends are more likely to say what will make you happier rather than what’s practical, which is why inviting one friend should be sufficient, at least for your first board.

Finally, you should also invite any personal advisors, mentors, or co-workers to your board. These people will have more professional experience with you and will be familiar with how you work and approach certain goals and tasks. This is important as they can give you an expert opinion on any career-related decisions based on their experience working with you on a professional level.

Upon making a list of prospective board members, you can then start reaching out to people with information about your board, what they should expect of you, what you expect of them, and how the arrangement will work. It is crucial that you provide prospective board members with all of the information they need so they can provide you with the best advice possible and can interact with you at all opportunities.

Board Compensation

Corporate boards generally compensate people through a salary model in order to attract the highest-quality candidates — a monetary transactional arrangement. This option is not necessarily applicable to personal boards because you would be dividing your salary and diverting most of it to your board. Therefore, personal boards could use the concept of Income Share Agreements (ISAs) in order to reasonably compensate their boards for success.

The biggest reason for using ISAs is that it aligns the incentives of both the person and members of the board. The board members will make more money only if they provide you with advice that helps you succeed, and you will only pay your board members if they have guided you to success. This means that board members will provide more actionable and detailed advice as they have a literal stake in your future success, and should also result.

Another way that you could compensate your board would be through offering them pro-rata rights in your next venture. This would mean that if you were to raise money for a company that you have started, then your board members would have the legal right to participate in the round. Pro rata rights may also allow you to attract better board members as they know that their advice would have a direct impact on how you pursue a company and allow them to get more involved if you succeed.

However, your personal board may not be compensated. Helping someone make better decisions will have a significant impact on their life, and the feeling this brings will often be enough to encourage the best talent. If you are an ambitious individual on track to succeed, then people will volunteer to participate in your board because seeing you succeed will make them feel happier and as if they have been part of real change in the world.

Board Relations

Maintaining a personal board requires you to develop strong relationships with all of your board members. Business is powered by connections between individuals, and starting a personal board is no different. The most important aspect of maintaining good person-to-board relationships is ensuring that you are transparent in your progress and provide board members with the information they need to provide you with effective advice that can have an impact on your success.

If you have had a productive week, then your board members can celebrate your wins with you, which will make them feel as if their advice has had a real impact on your life. On the other hand, if you have had a very poor week, checking-in with your board members allows you to break down the obstacles you are facing into more addressable components, which will help you overcome the issue. Your board is there to provide you with advice, not to criticize your actions and progress. They will be there to celebrate your successes and guide you through any issues you are experiencing when times are tough.

Another way to develop good board relations would be to convene the whole board on a frequent basis so they can discuss your success as one body and help you set actionable and measurable goals for the future. You may decide that a formal presentation every two weeks is optimal, or you may think that a monthly update is more appropriate due to the long timeframes involved in seeing the tangible output from your work. Whatever you decide, getting the whole board together offers you the opportunity to present your progress to a group of people who are passionate about your success, which will help you understand your own progress from a new angle, and benefit from the thoughts of your board members.

Having a productive board meeting will be dependent on the structure that you develop. Before you host a board meeting, you should be sure to issue board members with a few bullet points of information based on your past progress so you can start discussing what is important as soon as possible. This may take the form of an informal email or a more structured document that outlines your goals, progress, and what you want to discuss in your board meeting.

You should also develop a set of Key Performance Indicators (KPIs) for yourself before the board meeting, and discuss them with your board during the meeting. KPIs will make it easier for both you and your board to measure your progress and set actionable and achievable goals for the future. In addition, developing a set of KPIs will create consistency between meetings and clarify what you are working on developing with your shareholders. KPIs may include social media followings, salary, your position at work, et cetera.

You may also decide to grant decision-making power to your board. This power does not need to binding, but you may ask that the board votes on particular decisions so you can get an overall understanding of how they feel on a particular issue. This also will make board members feel more involved in your life as they have more power to guide your decision-making, which can help with board member retention and overall engagement in your board. You may also elect for some of these resolutions to be binding so that board members can feel even more involved and you can show to the board that you are committed to their advice.

The logistics of starting a personal board are a little more complex. If you are going to convene in person, then you may choose to rent out a local conference room for an hour or two every month. If you are going to convene online, then there are a few tools you should consider. For video conferencing, you could use either Zoom or Daily.co, two platforms that offer a strong free version and are easy to use. You may also decide to use Slack so that board members can get in touch with you at any point when they feel they can help you. You may also decide to use Twitter, Email, or another similar method of communication for more informal advice.

One thing that is important to note is that your board will evolve due to changing circumstances. Changing your board means that you can adapt to new changes in your life and ensure that your board members can easily become engaged with the latest in your life. This may take the form of changing your primary means of communication or developing a different structure for your board meetings. Continuous iteration will also make it easier for you to keep up-to-date with your board, even as your life gets busier, which will create a more effective and efficient board.

Conclusion

The concept of personal boards is very new and is open to interpretation. Some people may decide that an informal personal community is more appropriate because they are unable to commit to a higher level of involvement by others in their life. Establishing a board of directors is all about your specific needs. If you think you would benefit from more formal presentations like a company’s board of directors and include more structured check-in updates for board members. However, you may think that your board should be more formal and therefore forego some of the formalities aforementioned.

Creating a personal board allows you to stay more accountable, provides a source of motivation, and ensures that you have the advice you need to succeed when you experience a problem. The best part is that setting up a personal board is easy to do, and, in fact, you can get started right now. Talk to people who you think would be able to provide you with insightful advice on your future, and decide on how your board would be structured.

Lastly, make sure that your board meeting doesn’t become a bored meeting.

Thoughts on Personal Moats

Personal Moats, commonly referred to as “unfair advantages”, have become a more prominent topic of conversation recently. On a high level, a “personal moat” is that thing that makes you stand out from the crowd, whether it be due to your experience, network, or something else.

The best personal moats should be durable to change and will be something that you can build over time. Your personal moat will become a critical part of your life, and will inevitably be the thing that makes other people want to talk to you. If you have a unique insight to share, then you will be the only person someone else can go to for that perspective. Companies also have their own moats, although they refer to the economics of the business.

I have been developing my personal moats since the age of 8 upon further reflection, but I have not been conscious of that point until very recently. Below I will list the things that I consider to be my personal moats, so you can consider what your personal moats are.

Focus on a particular subject matter. Go deep. This seems obvious but the best way to develop a personal moat is to focus on a particular subject matter. One cannot become a master of everything. I personally focus my time on business, economics, and technology — the areas I am interested in learning more about and have been working on for the last few years. Discover what you can be great at if you invest the right amount of time and resources, and consider how that aligns with your goals in the future.

Listen to podcasts and consume as much content as possible. I listen to two podcasts every morning, and while anyone can do this, audio can provide a new way of communicating a particular issue, and can help you complete your thoughts. When you have finished reading an article, consider looking for a podcast with complimentary views to reinforce your knowledge, which will help you retain the knowledge and develop a larger picture of an issue.

Maintain a healthy body. This is a difficult one, especially if you are in a routine of eating poorly. If your diet consists of a significant amount of caffeine, sugar, and carbohydrates, your ability to retain information will be limited and you will find it difficult to focus on work for prolonged periods of time.

An investment in your body is an investment in your knowledge and future productivity. Get enough sleep. Exercise when you can (even if it is just taking a 10-minute walk). Eat more substantial and healthy food. Meditate. These habits can be hard to implement but when they are a part of your life, you will be a more productive person, allowing you to focus on what matters most to you.

Build a company. Arguably this is one of the easiest ways to develop a personal moat. Even if your company fails after a few months, starting a business requires a significant amount of in-depth thinking and creativity to ensure survival in the future. This type of thinking normally asks that you think differently about an issue and consider it from all angles to stay ahead of the game. Build a company in an area you are passionate about, and you will learn so much.

Be productive. This one ties into everything mentioned in this post. If you have a spare minute, try to do something constructive. This could be related to your job or a hobby that you have. Doing something that you enjoy can help you relax and learn more about a subject that you are passionate about. Be that person that people see as productive and efficient. If you are struggling to think about the work you want to do, then reflect on your life. This is an investment in your future productivity and thus falls into this category. I try to do as much as possible in a day and if I have nothing else to do, I will take some time to research my passions.

Jump on new opportunities. As humans, we are conditioned to avoid unreasonable risks. Getting in on the latest opportunities involves risk. People need to consider the benefits of an opportunity, rather than the costs if it fails. The people in this mindset normally are the ones that think positively and show a stronger motivation towards a particular cause. Be the ambitious one and don’t be afraid to do something new. In fact, I encourage that you try to do something venturesome and enterprising every day, no matter how small, and use the experience that gives you to your advantage.

Do something different. The ideas that nobody is pursuing or thinking about make for the best personal moats. Think about the issues in the world that you think should be solved that have no reasonable solution, and then think about how you would fix them. If you do something completely different, it will be more difficult for people to catch up and you will always be ahead of the game. The pioneers of a revolution always have the most unique insights on the issue they are trying to solve.

Personal tracking. I have been looking into personal tracking for the last few months, and have started tracking key metrics in my life on Airtable. While many are subjective, the practice has allowed me to identify my most productive periods and the factors that contribute to decreased mental states and motivation. This data has helped me become a more happy and positive person, and also affords me the opportunity to track my progress in a tangible and measurable way. Furthermore, this data has allowed me to avoid putting myself under unnecessary pressure and further understand what I am actually capable of.

Build an inspirational community. The people you spend most of your time with are a reflection of you. Immerse yourself in an environment with people who inspire you. This is not always possible, but you can always read about other people (or listen to podcasts about them). Your community will be there when you need help to offer assistance, provide you with feedback on your latest ideas, and also allow you to formulate your ideas into a more cohesive plan. Talking to someone is an underrated way of refining your knowledge.

If you are thinking about what your personal moat could be, do some research online for “how-to guides” or a group of other people who are doing the same thing. If there is such content available, it means that there are already other people with that unique characteristic or ability, which makes for an ineffective personal moat.

Building a moat often involves doing something that others have not done before. Don’t be afraid to look crazy. How do you think people reacted to the work of Steve Jobs when he completely changed the way we interact with phones in the start, or Thomas Edison when he developed a loud but innovative way to illuminate a whole house? Take some time to reflect on what your unique edge is, and build upon it.