We live in an age of McBanking - where like McDonalds - unskilled people, relying on simple formulas, can only do simple things. If you don't have a job or a house, there is not much they can do for you.
If you are a under 40, without a job or a house, if you want a small business, a start up, or you are an artist or a maker: you are out of luck. Banks as we know them now don't know how to lend to you. So if you want to be part of the new economy, you are out of luck.
But not for long. There are a whole new set of tools and organizations are emerging that will be able to help you. You may of heard of some like Kickstarter. Many have high hopes. But many are failing when they use these new tools. They are failing because many of the people who are using them, use them by applying the current rule set.
The New/Old system of credit was based on your reputation and your network. The challenge that we have in using the new tools is that all we know is the old culture. The new tools will not work well for you if you do not make the changes in how you behave and how you see the world. You will be like the French in 1940 who saw the new tank as an old mobile pillbox.
The secret of the new system is to understand and live the ancient network system. Here is a early chapter of my new book - You Don't Need a Banker - that I will publish on Kindle in early November. In this book, I will do my best to show you what went wrong and what is coming and how you can do well in the system that is coming.
The key to your future success is to understand the cultural demands of living in a real network. So here to help us "get this" is a true story about how this used to be done.
"Personal Trust is the Core of Real banking
Trust is the core of credit and Trust is at the core of the real new network economy. As it always was.
It’s Personal. In the next few chapters we are going to examine the DNA of Trust, Networks and Trust Platforms. When we then look at the new Trust based financing systems, we will see how these rules are baked into the new. I hope then that you can use them to your benefit.
This is Georg Giese 1497 1562 from Danzig (Gdansk). Holbein painted his portrait when Georg was in London running the operations of the Hanse. He asked Holbein to paint this kind of picture to help him reinforce his Trustworthiness. For in that time, and now in ours, the more people could trust you, the better off you were.
I think that Holbein did a good job, don’t you? Do you get a feeling about who this man is? I see that he is a serious person. He shows me that he can read and write. He owns books. He has splendid clothes: but is not too flashy. He is obviously wealthy: but quietly so. He is young and so must be quite dynamic to have got so far so early in life. He is serious.
He looks trustworthy to me.
Georg of course had his own business. It was personal. He sold directly to his customers. Of course he wanted his customers to Trust him. But there was more. The reason that he had the picture painted and the reason that he placed such a value on his good name was that he was a member of a large network of merchants. He needed access to this larger network. He needed to be trusted to get access to this network.
The network, The Hanseatic League, his community, was the key to his future as it will be for you.
Why Trust? It’s all about your Network
Networks are what will give you, the tiny business, all you need to do well.
It will give you credit. It will give you access the markets. It will give you access to tools and support. It will defend you in times of trouble. It will enable you, the tiny personal business, to have power in an uncertain and dangerous world.
This map shows the network of the Georg Griese, the merchant in the painting. He is a merchant of the Hanse. The Hanseatic League was a network of merchants that started in the 14th century. It lasted until the late 17th century. For much of that time, it was the most powerful business entity in the world.
Each Hanse merchant lived in one of the cities along the coast. Each city had its own local infrastructure, halls, warehouses and ships. Georg’s local network in Danzig was his base. That was his local trusted network.
But then he had access to an even larger network. For all the cities combined into larger trusted networks to mobilize their fleets when faced with pirates. Or to break into new markets such as England where they built a network warehouse in London and negotiated a trade deal with the King. Georg Giese was painted while he was the agent of the Hanse in London.
Back to Valdis Krebs network map. The Hanse looked like this. Each city state was one of the sub networks. The Hanse was the whole.
On his own, Georg would have had no power. After all, like you, he had just a tiny business. But, as a member of the most powerful network in the world, he could negotiate with the King of England.
This is why he made trust so central.
The network demanded that you be trustworthy. There was too much to lose if you were not. Trust is so much more than a “Brand”. Then all of your life was lived in public. There was also no separation between your business life and your personal life. Every part of your life added or subtracted from your trust.
If you look at the foreground of his painting you will see a vase of flowers. They symbolize his commitment to his fiancé who is the daughter of a business ally. He is making a public and eternal statement for his wife’s family that this marriage is part of his life. He is giving his public word.
You could not even escape the actions of your family. This is why so many surnames are extensions of the father’s name. It is why I am called Paterson or you might be called McDonald or Johnson. It is why on Prince Edward Island, people still ask who your father was. We all know that how we are raised shapes our character. So how our family behaves affects our trust too.
This approach to life is very different from how we live today when most of us live in anonymously. Where we rely not on anyone’s word but on contract. When our families mean nothing in our business dealings. When we are told to keep our personal lives separate from our work lives.
The system we live in encourages anonymity. We can see the results online in the comments where people say things that they would never say face to face. But Georg lived in a world that had all sorts of systems that meant that his whole life was in the public domain. First of all they lived in a very small world. Towns were often less than 5,000 and no larger than 35,000 people where it was possible to know everyone.
The good news for us today is that we too once again can live in a village. The web connects us in the same way that the geography of the Baltic connected the Hanse. Our future depends on this village.
Secondly new tools are emerging that put our business onto public display as well. I call these Trust Platforms. Here is how they worked back then. When we see how they work, we will see that they guide the new tools that we have just bought back to life."