The subject of this year’s festival is”lost in transition”, and the prevailing feeling from the community this is an increasing concern about the relationship between peer market platforms and participants, especially regarding distribution of value, management, etc.. This isn’t really a huge surprise, given the big financings and shocking valuations that lots of corporate platforms within this area are putting up.
At exactly the exact same time, the growth of this blockchain as an application platform has put a great deal of people (ourselves in USV added ) to the chance of a sensible, practical alternative to centralized web services.
The name”venture capital vs community funds” is an intentionally provocative strawman. The point I wish to create is that of course there’s a natural tension here, but it is not a brand new dynamic, an either/or option, or even a zero-sum game.
Rather, it is a part of a recurring pattern which we may see dating back decades (if not much longer) from the history of technology. Viewed this ancient lens, we can observe the patterns of the cycle and use them to help us understand where the viable opportunities are going to be in this phase.
But first, I wish to point out that why we are all here is that we believe in the power of networks — of the connected society — to expand consciousness, deliver economic opportunity and solve massive problems (energy, health, education, etc) in ways that have not been possible previously.
Before my talk at OuiShareFest, Robin Chase went and made a compelling plea for us to develop networked, scalable solutions (both venture-backed and community-backed) into the largest issues facing the world today, her greatest one being climate change. I am a firm believer that this version will continue to have deep, profound impacts how we live, how we operate, how we learn, and what we create, and that we’re still at the very early phases.
However, as we become more and more comfortable with this model, we are beginning to pay more attention to the specific structure of the networks, and the energy dynamics built into them.1/ The Problem (chance )
So, the difficulty that many in this area have identified is an increasing concern about the imbalance of power between peer saving platforms and the participants that they support, particularly as the most older platforms (Airbnb and Uber being the elephants in the room, however there’ll be many more) grow to be quite large, wealthy and powerful businesses.
The issue is basically one of trust. And especially in the case of peer saving platforms and employees, it is about economics and management . So the question becomes, are participants getting a reasonable deal, and do they have a suitable amount of freedom and control? There’s an increasing sense that they might not be, and that alternative architectures will need to be investigated.
Although this may feel scary to a lot of observers of this space, particularly those coming from a public interest standpoint, we should not be surprised to see this occur.
So rather than look at this phenomenon only as a completely new issue to be solved now, it is more useful to view it as yet another stage in a recurring cycle, that introduces both understood challenges and understood chances.
(Note: the green boxes are businesses, along with the blue bubbles are”available” technologies such as free software and open protocols — i.e., venture capital and community funding, respectively)
IBM and AT&T once had a monopoly on the PC and the phone system, respectively, which was opened by the PC clones and the modem moving over-the-top of the phone network (not to mention the authorities break-up of AT&T).
This continued until the proliferation of Linux and IP protocol stack, which poked a hole in Microsoft’s desktop OS in addition to AOL’s walled garden, providing us the open net.
Then, in addition to that recently open platform, today’s leaders in web (Facebook, Google, Amazon, Twitter, etc) and cellular (Apple, Google, Xaomi) built their companies. It is worth noting that, with the exception of Android, there has not been a very significant hole poked in the Company positions staked out by this creation of businesses (though there have been efforts, such as Diaspora for Facebook and Pump.io for Twitter)
Finally, we are left with the current peer/sharing/collaborative market marketplace platforms. These are the new, venture-backed companies staking out land and building what is going to become the next generation of powerful incumbents. And while we’ve seen the beginnings of open protocols which directly challenge their power (like the La’Zooz ridesharing protocol), it is all very very ancient.
So there is the pattern: tech businesses build dominant market positions, then open technologies emerge that erode the the tech firms’ lock power (this is sometimes an coordinated rebellion against this corporate power, and is more of a happy accident). These open technologies then subsequently become the stage upon which another generation of venture-backed businesses is built.
Thus, all that is to say: this isn’t a new thing. And that viewing this as part of a blueprint can help us understand what to make of it, and where the upcoming opportunities could emerge.
Given that this moment in the cycle — where we have a few of big and powerful platforms in certain sectors, and an increasing feeling of discomfort about that power — how might people who influence change go about doing this?
In this section, I wish to actually stress the”how can you get there part” over the”what might an alternative architecture seem like” part. It is quite easy to envision a”driver-owned uber” (as many people here have suggested) in its fully realized form, but it is a lot more challenging to consider how anything might become. The history of technology is strewn with failed efforts to substitute closed/proprietary systems with open ones.
Here, I will point out four thoughts that may be helpful in thinking about this:
Now at OuiShareFest, Aral Balkan from Ind.ie talked about a significant collapse of the open source movement over the past several decades: to forfeit short-term usability and expertise to get long-term (and abstract to many people) freedoms. He framed this problem as”respect for expertise” and”respect for usefulness” (or something along those lines) as both partner values together with respect for individual rights. I’d agree with that, and anybody following this distance can note the failure of previous efforts at open platforms that just were not usable enough (such as: openID).
However, it does exist and it’s due to non-linear changes in technology.”
— Albert Wenger, USV (connection )
My colleague Albert discusses the Lindy Effect: the notion that each and every day a stage idea exists extends its anticipated overall lifespan. To put it differently, ideas and technologies have momentum — the longer they are around the longer they will stay around. It’s possible to”interrupt” them, but that takes a deep, non-linear tech change. And even then, they do not just disappear overnight. By way of instance, Microsoft has suffered two years of disturbance from the net — against Windows as the dominant OS, then against Office as the dominant productivity suite — but it still alive and kicking. So that the disruption that contested Microsoft did not put them out of business, but it did open up the marketplace for many many many others to enter. Looking at now, Uber clearly is not going anywhere, though”open” challenges to them could open up the market for many others.
In my mind the non-linear shift in technology which has the best capacity to challenge today’s incumbent platforms is the Blockchain (and related decentralized technology ) which are in the process of externalizing data from mobile and web applications (more on that below).
“Your Risk is my chance”
— Jeff Bezos
This profound idea isn’t new to the business world, but it is nevertheless instructive for new technologies appearing to compete against the new incumbents. By way of instance, I met a blockchain entrepreneur/hacker lately who was incensed about the margin that Etsy takes on trades (and to many people Etsy is about as fuzzy bunny because you can get as a massive web platform).
“The first trade in a block is a special trade that begins a new coin possessed
— Satoshi Nakamoto (connection )
This is a line from the first Bitcoin white paper, and I include it to point out the significance of strong incentives in deploying technologies that are open.
To the extent that this incentive-to-cooperate version can be extended in different directions, we might be on to something big.3/ What we are looking for
Given all of the above, here are a few things we are looking for in USV:
Collaborative platforms in greenfield industries
To the first point about the value of networks (to society), there are lots of many critical sectors still working under inefficient bureaucratic hierarchical models, which are ripe to become re-architected in a network version (I am presuming energy, health, education, and lots of others).
I guess that these businesses will be developed by”traditional” networks (e.g., venture-backed, centralized networks), because these have the capability to maneuver the most quickly, to experiment with new versions (failing frequently ), and to help train sectors/cultures a networked version is possible.
Employee support services
A significant concern with the emerging power of internet platforms (especially from the collaborative/sharing space) is employee power.
My belief is that”marriage 2.0″ will be a stage, more than a company, and its power will derive from the information leverage it is able to reach within the platforms that use its employees.
1 way to battle”thick” platforms would be to construct”thin” platforms which do less, take less, and exert less control. We’ve invested in several of them (DuckDuckGo, in comparison to Google, Twitter, in contrast to Facebook, Sidecar compared to Lyft, etc) and are searching for more. Quite often,”thin” also means decentralized in some manner, pushing power, control and economics farther out to the edge.
Ultimately, new protocols which radically re-architect power, control and information. Inspired by Bitcoin and the blockchain, there’s now enormous energy in this area. It is early early days, but it does seem like that has the potential to become the next”open coating” that washes over the most recent generation of large companies (see the diagram above) and cracks open the industry even further.
At USV, we have made several tiny investments in this area (OneName, and 2 which aren’t yet declared ), and are looking for more. It is not clear yet where value will collect at this layer, and a lot of it may and ought to stay as”community capital” from the system.
In conclusion: we’re at a very interesting time with the maturity of this massive web and mobile platforms, the rapid growth of peer/sharing/collaborative platforms, and the development of distributed protocols. All this has increased very interesting questions about innovation, global problem-solving, control and economics, and the discussion here will definitely lead to short- and long-term impacts on how and what we build.