The Promise of Peer-to-Peer Credentials

The last thing to unbundle from universities

My last post detailed how college is a bundle between education, networks & relationships, and the credential. Of course, the education itself has become unbundled,  and the networks/relationships have become more recently threatened by COVID—but when it comes to credentials, universities effectively retain their monopoly.

Right now, we’re leaving millions of incredibly powerful credentials on the table—peer-to-peer credentials: Think of the best people you’ve ever worked with—your endorsement of them is a credential that you haven’t yet created. 

My bet is that P2P Credentials will emerge as something that will supplement and unbundle the college credential.

If I trust someone and they give me their top five people they’ve ever worked with, that means more to me than a Harvard degree. Think about things like the Thiel Fellowship, Pioneer, and Tyler Cowen’s Emergent Ventures programs — the most valuable thing there isn’t the money, it’s the credential. Effectively, those fellowships are Peter Thiel, Daniel Gross, and Tyler Cowen stamping their list of top young people. While there could be hundreds of similar programs, you shouldn’t have to create a program to be able to give a credential. There will be platforms that enable this.

Credentials have traditionally been zero sum—Harvard can only fill so many slots. But what if we could make credentials positive sum? Or at least expand the amount of legitimate credentials there are, so more people can benefit from the opportunities they provide?

Think about someone you didn’t take seriously until someone you respect told you that they think highly of them—how many missed opportunities are there because people miss out on this information? We have inefficient markets for reputation today, and that creates all sorts of market failures as a result. 

If you publicly endorse someone, you’re giving them a credential that’s just as valuable as one they paid $250K for. If you gave it to them, they’d have more opportunities as a result. Heck, maybe that’s how they break in in the first place. And giving that credential is free for you. 

Last year, we started working on a platform for P2P credentials called Cosign.

On Deck stopped working on it so that we could triple down on On Deck fellowship, but we’ll return to it in the next year. I’m writing this post as accountability, but also to drum up interest to work on it and be a part of it when the time comes. Or to encourage you to build it yourself! The more the merrier.

So here’s the idea: Imagine if there was a verifiable way to look at the early discoverers of Mark Zuckerberg, Steve Jobs, etc. 

The first angel investors in Facebook have a ton of status, but what about the people who discovered Mark even before the angel investors who didn’t have capital to invest—the people who invested their social capital?

Investors love to be first-check in. There’s status associated with it—it shows you believed in someone before anyone else did, you weren’t a sheep follower like the other investors. 

We all want to be the first person to give someone their shot, to put people in business. Right now, only financial investors can. But imagine a class of social capital investors who could do the same. Cosigning someone is essentially like being the first social capital in. Which in some cases is just as valuable as the first dollar. People always remember the first people to believe in them.

The premise of the product was that people could cosign other people and thank people who had cosigned them. It turns out to be pretty viral behavior on Twitter. 

This makes sense. People want to thank people who’ve helped them as a way to build the relationship and boost their own status (i.e if someone as high status as Jack Dorsey helped me, thanking him also showcases that he believed in me and makes me look more impressive).

People want to discover and promote emerging talent not only because it’s meaningful but also because it has a practical purpose—once they do well, they’ll look to return the favor. That’s how Silicon Valley works. 

Cosign is time-stamped, social capital investing in people.

I expect the next great VCs will get their start on a P2P credential platform, proving their talent discovery abilities way before they ever invest. They’ll have built multi-year track records in their 20s by cosigning the next great founders of their time, enabling them to prove their access & judgement without capital

More broadly, I’m inspired by the idea behind these P2P credentials. That something as easy as a cosign — which is totally free — can open so many doors 

I first discovered the term Cosign in the hip hop community. Memphis Bleek Cosigned Jay Z. Jay Z cosigned Kanye. Kanye cosigned Big Sean. But also in technology: Paul Graham cosigned Sam Altman. Peter Thiel cosigned Joe Lonsdale.

In a world where talent is globally distributed, where we’re losing confidence in the power of our credentialing institutions, a cosign can make all the difference.

We’re suffering, as Patrick Collison and Tyler Cowen have noted, from a compliment deficit. Not in a millenial, insecure way, but in a “we-could-raise-the-ambitions-of-a generation way” by giving out this free resource— social capital. How many people out there could shoot for much more ambitious sights if we told others— and themselves— how much they’re capable of? 

For too long, these P2P credentials have happened in back rooms (“The old boys clubs”). It’s time we made a way for this to happen out in the open, where people from all backgrounds all over the world could get more easily discovered. If you’re worried that this will further advance people who already have opportunities, I assure you it would be better than what we have now. It’s easier to get discovered by millions of people than by hundreds of institutions.

In a world where P2P credentials exist, people can lend their social capital to give others opportunities they wouldn’t have had otherwise. Want to help someone break in to an industry? Cosign them. Want to promote someone you think doing important work that should get more recognition for it? Cosign them. Want to tell someone that you think they have amazing potential, or that you’d back their startup if they started something? Cosign them.

OK great, so why haven’t P2P credentials taken off before? LinkedIn recommendations exist already and...they’re not great. The challenge with LinkedIn recommendations is that there is no scarcity to them, so there’s no real signal. People endorse friends left and right with no consequence. Because there’s no scarcity, there’s no cost to doing so, reputationally or otherwise. Cosign would have scarcity built into it. On LinkedIn there’s also no way to “rate the raters”. Cosign would have to figure out that part as well.

But what’s the incentive for people to endorse others? If they had proprietary information on someone, wouldn’t they keep it to themselves, especially if they’re hiring or investing? Maybe in some cases, but I suspect this will go the way of blogging and sharing information: The benefits for being known as an expert—or a talent discoverer/king-maker, in the case of P2P credentials—far outweigh the cost of no longer having proprietary information on something or someone. If you’re known as a talent discoverer and king-maker, more people will want to work with you.

Doesn’t this exist already—Isn’t this Twitter? Twitter does have elements of this. People I follow on Twitter fall into 1 of 3 buckets: personal friends, people I find interesting, and people I find impressive. There’s signal there, it’s just unclear what the signal is, and there’s also a lot of noise. Consider the fact that Marc Andreessen follows 17,000 people. If he could only follow, say, 50 people, and it was clear that a follow was an endorsement, that would be an incredibly strong signal, again worth more than a Harvard degree for the person being endorsed.

Effectively, P2P credentialing enables markets for reputation. Some people bristle at this, fearing the Black Mirror-esque Yelp for people where people air out their grievances or attack others. I’m envisioning that the platform is only positive and celebratory, although of course there’s a ton of value in “don’t work with these people”. I’m OK leaving that information to back-room reference calls. I worry that a site with anonymity would just lead to endless ad-hominem. Hopefully a site that either has real names or verification will be seen as more legitimate and thus stymie the power of anonymous character assassinations.

P2P credentialing will also enable P2P marketplaces. Uber and Airbnb are marketplaces that figured out how to utilize an idle asset: Airbnb turns your spare bedroom into extra cash, Uber turns your car into extra income. However, the most valuable asset in the world that’s underutilized isn’t cars or bedrooms—it’s people. There are billions of people whose talents are underutilized. There are people with the same IQ, same potential, getting paid 100x more because of where they live. Many unicorns will be built off of this “secret”. Look at every job category in the US + ask “does it have to be here?”

And that’s just P2P labor marketplaces. But you can imagine people search engines related to career, learning, friendship, dating, care-giving, exploring hobbies—anything. It’s fascinating how when we want to find books, Amazon has so much data on our preferences and can recommend the perfect book, but when we want to find people, we don’t have anything. P2P credentials will enable people search engines and matchmaking companies, so that more people can find their people. Of course, I’d hope this is opt-in only on all sides, so that it’s only for people who are seeking or looking to be found, not for people who want to meet people the old fashioned away—the social equivalent of going to the library.

In conclusion, one of my favorite things is finding people who are great and unknown— high aptitude, low credential— and amplifying, connecting, and working with them. There’s an arbitrage opportunity in discovering people who are great at what they do but weak at selling themselves, describing their career ambitions, or even finding the right roles for them in the first place.

Right now, angel investing is the way to demonstrate your ability to discover this type of talent. 

Soon, Cosign and P2P credential platforms will democratize talent discovery at scale, enabling people all over the world to discover the next Mark Zuckerberg or Sheryl Sandberg (And others in other industries) without having to write a check to prove their talent discovery abilities. 

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Oh and for people who do want to angel invest, On Deck in partnership with Village Global has launched a fellowship for current and aspiring angels. Apply here.

Read of the week: The Quest for Cosmic Justice, by Thomas Sowell. I summarized some of his quotes here

Listen of the week: Balaji Srinivasan on The Realignment podcast discussing the decentralization of media.

Watch of the week: Marc Andreessen interviewed by Dylan Field on universities. I summarized here

Cosign of the week: John Exley, with the best introductions in the game.

Until next week,

Erik