Why we limit capital gains on the Peepl network
By Leon and Zarino, Peepl co-founders
The global economy is broken. We live in a system that values wealth over all else. One where the richest 26 people in the world own as much as the poorest 3.8 billion. And where, incidentally, of that list of 26 billionaires, only 3 are female, and only 6 aren’t white.
This system of run-away wealth centralisation results in massive inequality, across every corner of the world.
Take New York City. It’s currently home to 107 billionaires – more than any other city in the world. Yet, at the same time, almost one in five New Yorkers (1.6 million people) live in poverty, and almost 50,000 sleep in the city’s homeless shelters each night. Black New Yorkers are twice as likely as any other group to be stopped and searched by police. And of the ten zip codes in the city with the highest COVID-19 death rates, eight are predominantly Black or Hispanic areas.
We’re over two decades into the Internet age. Free, instantaneous communication was meant to level out inequalities, bring opportunity to all.
Instead, it’s left us disconnected and poorer, cementing the existing chasms between rich and poor.
As our shareholder, and advisory board member, Douglas Rushkoff points out in his latest work, Survival of The Richest…
Will it be Bezos migrating to space, Thiel to his NZ compound, or Zuckerberg to his Metaverse?
This ‘out of sight, out of mind’ externalization of poverty and poison trickles down through the Mindest to the rest of us; but the collateral damage doesn’t go away just because we’ve covered our eyes with VR goggles.
The longer we ignore the social, economic, and environmental repercussions of our actions, the more of a problem they become. This, in turn, motivates even more withdrawal, isolationism and apocalyptic fantasy.
Well, we think it’s time for change. That’s why we’re rewriting local economics, building the next generation of financial components that will incentivise the sharing and distribution—rather than the extraction and centralisation—of wealth.
But, when we started Peepl, we knew that it wouldn’t be enough to just say stuff like that. We’d need to live it, to bake this radical dedication to wealth redistribution right into the founding principles of our organisation and our network.
That’s why we proudly limit capital gains for our investors, our team, and our founders.
What are capital gains?
Capital gains are the profits you make on the sale of an asset which has risen in price while you’ve owned it. For example, the gains you might make on a house that has risen in price since you bought it – or on your share of a company that you invested in early.
That second example—investment into companies, usually startups—is the case that interests us the most at Peepl, since A) we’re a startup, and B) we’re looking for investors!
How this normally works in the world of startups is that investors exchange money for some amount of ownership of the company. If the company does well, its overall value rises, and the investor’s share of the company will be worth more than they paid for it. Eventually—maybe once the company is worth 10×, 50×, or 100× what it was when they initially invested—they’ll sell their share of the company, and take a massive profit. At least, that‘s the aim.
The thing is, to an organisation like Peepl, this pattern of investment isn’t a feature, it’s a bug.
Not only would it be massively hypocritical for us to play into the same hyper-extractive hyper-centralised wealth creation system that our network is meant to dismantle, but it would also present a massive incentive for Peepl to be one of those companies that grows at all costs, that pays lip-service to solving the massive inequalities in the world, while really just working to increase the financial gains of early investors, team members, and founders.
We want the health of the network, the prosperity of the local economies we power, to be at the heart of Peepl – not unbridled returns for the few.
That’s why we took the decision to limit returns on investment—both into Peepl Ltd, and the network—to…
- 100x for early investors
- £5 Million for co-founders & partners of the network
- 10-50x for later investors
- £5 Million for network participants / early adopters
Any remainder is reinvested into their local economy. Simple as that. It’s an example of what’s been called a Robin Hood Smart Contract.
Won’t this make you uninvestable?
Quite the opposite – it makes us more attractive to the right kind of investor.
By removing the scope for massive returns, we dramatically change the incentives for potential investors. Like the toxins in a pufferfish, the Robin Hood Smart Contract makes us poisonous to the investment sharks out there, looking for a quick buck or a stratospheric return.
It also disincentivises the hoarding of wealth or ownership inside the network (since you can only take so much of it with you when you go), and it provides a mechanism for the entire network to benefit when any given investor benefits.
But most of all, it’s the clearest, most fundamental, most permanent way we could find, to embed the ethos of our vision into the very structure of our network, and the company that stewards it.
The strength of Peepl is the network. It’s the builders, the makers, the entrepreneurs, the creators, the renters, the riders, the sellers, the savers.
Ensuring we include and listen to these people participating in this new way of doing things, from day 1, and giving them—and not just the founders, or board, or investors—ownership of what we do, is the way we’ll drive the next generation of local economies. Together.
If that sounds like a community you’d like to be part of, then drop us a line.
And if you have some thoughts, or want to collaborate on some of the economics, nuances, problems, technology or structure of limiting and redistributing capital gains, you can email us at firstname.lastname@example.org.