A couple of years ago, I was helping my mom with her finances. She had a bit of savings in cash. I suggested that she put some into the stock market, to diversify her investments and give her some return. She looked at me with a confused look, almost shocked that her daughter would say such a thing. "Did you forget 2008 already? " she said, "I don't trust people I don't know, sitting in skyscrapers I can't see, investing my money into companies I don't understand."
It's easy for anyone who reads the headlines to share my mom's broad distrust of the capital markets. She is not alone in her feelings. Last year, a survey by Wells Fargo showed that most young adults say that they are either "not very confident" or "not at all confident" in the stock market.
Finance is based on human trust, and when trust erodes, the whole system goes down with it. For most of history, this trust was and is grounded in personal relationships -- people borrowing and lending money face-to-face with people they knew from their communities. Even the New York Stock Exchange began with 24 stockbrokers agreeing to trade with each other under a tree on Wall Street.
Enter technology. When mainframe computers came along in the mid 20th Century, they increased the efficiency of finance -- a great benefit -- but at the expense of human relationships playing a role at the point of investment. Since this time, we've learned to trust remote institutions with our money, rather than people we know. Almost all of the investment opportunities available to main street investors entrust money to an indirect network of people that the investor can't communicate with nor know the names of. People like my mother, who have lost faith in the system, lock their money out -- which prevents others from building anything with it. Both sides lose, as does the economy as a whole.
As the Wisdom 2.0 conference unfolds this weekend, we're reminded how technology can lead to unintended consequences, both good and bad, and how it's our responsibility as human beings to be conscious of which consequences we intend. We're reminded of how technology, like money, could and should be used as a means towards an end of greater meaning for the world, rather than an end in itself.
Now, decades after the mainframe era, we are returning finance to its human-scale roots. Democratized technology lets us not only communicate freely, but also send, receive, and aggregate money freely. As a result, against a background of stagnation and distrust, crowdfunding is making finance even more efficient while also returning it from an opaque and indirect system where trust is primarily built through regulatory disclosure requirements to a transparent and direct system based on simple person-to-person connections. We can now efficiently fund what we know, and thus consciously fund what matters to us. In other words, relationships matter again.
And when relationships matter again, so does authenticity, the foundation of human trust. On Indiegogo, people are more successful at raising funds for their ideas and bringing them to life when they are aware of who they are and what they want, and willing to show their authentic selves. That's why I encourage campaign creators to make videos that share not only what they want to do, but also why they want to do it. When someone can look you in your eye and see where you're coming from, trust is born. As a bonus benefit, some campaign owners have told me that the video-making process puts them in better touch with their own motivations. It makes them more conscious of their intentions.
What if a crowdfunding campaign is not authentic? I've seen repeatedly that it will simply not succeed. People bring the same dynamics to our platform that they do to face-to-face interaction. When it's transparent, open, and between real individuals, not abstract entities, falseness doesn't take you very far. By making finance personal again, being authentically you matters again.
It's not surprising then that my Mom asked if she could invest her savings in Indiegogo, after she told me that she didn't trust the stock market. "I know you " she explained, "and I see how hard you work. I trust you with my money."
When we started Indiegogo, I saw technology as a great means to solve the problem of inefficient access to capital -- a worthy end, in my conscious opinion. It turns out that crowdfunding is now also providing the means to return relationships, authenticity and thus trust back into finance overall -- perhaps an even more important end for the world today. I'm just glad that this unintended consequence turned out so positive this time.
This post is part of a series produced by The Huffington Post and Wisdom 2.0 in conjunction with the fifth annual Wisdom 2.0 Conference, held this weekend (Feb. 13-16, 2014), in San Francisco. Wisdom 2.0 is the premier event exploring the intersection of wisdom and technology. For more information about the conference, visit www.wisdom2conference.com. To see all the posts in the series, read here.