David Bowie was an innovator of so many things including in 1997 the first securitization of music royalties which came to be known as David Bowie bonds. In my book, A New Brand of Expertise published 15 years ago, I posited that Bowie was the first to create a human capital bond, since he was in essence creating a security from the creative works of a brilliant mind — his own. In my final chapter discussing the future of work, I asked this question: Why couldn’t there be similar bonds created in the human capital marketplace, synthetic instruments which could pool the revenue streams of thousands of the top independent consultants, protecting against down time, slow periods or any other cash flow disruption? A consultant bond, I argued, would place a value on knowledge much as companies value their intellectual property assets.
Now fast forward 15 years, the Bowie bonds, made David a cool $50 million but were not such a windfall for his investors given the industry economic disruption caused by the onset of music streaming. For more on this see http://money.cnn.com/2016/01/11/media/bowie-bonds-royalties/.
Although the music royalty bond notion may have fallen from favor, the consultant bond has more legs than when I originally described it. The weaknesses to my early argument, to be completely candid, was in the issuer. I suggested that the consultants collectively would be the issuer. Although I knew that was an unwieldy structure, it was thought provoking when discussing the future of work. What is different now, though is the human cloud.
Whereas my firm, M Squared, was one of the first to provide on demand expertise 28 years ago, now there are all sorts of intermediaries parsing work into everything from looking up addresses to writing code to managing corporate operations. These firms source, place and pay their resources in the cloud, and many rank them there as well. So my year 2000 notion of taking the top 500 consultants in an area was aspirational, but now there could be ways to do it through the yelp like data being collected on consulting purveyors. Human cloud companies could be the issuers. Investors would be buying into the knowledge and talent market, with prices fluctuating with demand and supply.
I know it still sounds a bit far fetched. But in the words of the inimitable Davide Bowie,
“Turn and face the strange, ch – ch- changes.”