Personal MBA: Reciprocation

Personal MBA: Reciprocation

I found Kaufman’s section on reciprocation extremely helpful and thought-provoking. He describes reciprocation as “the strong desire most people feel to “payback” favors, gifts, benefits, and resources provided.” He went on to explain that this innate need to pay back favors or gifts has been one of the foundations of human cooperation throughout history. It’s how influential people formed beneficial relationships and remained in power.

I see this concept of reciprocation today is in the world of podcasting. There are 100s if not 1000s of podcasts out there all giving away valuable information or entertainment for free. Many of these podcasts create quite a following for themselves, and if they’re smart, they leverage the trust they’ve built with their audience to create a source of revenue. Some podcasts ask for donations; others do affiliate advertising for goods and services they think their audience will enjoy or find helpful and some others sell their goods and services directly to their audience.

This subject also reminds me of a concept I discovered recently in “The Last Safe Investment” by Bryan Franklin and Michael Ellsberg called, “Advisory Equity.” They explain that when you are generous with your skills or experiences, you can often gain equity in the form of cash, access to valuable resources or other favors in the future. This equity is all built on the same principle of reciprocation Kaufman talks about here. It turns out that generosity is an effective way to increase your value to others as well as your standard of living.

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