Platform Scale

Platform Scale

Sangeet Paul Choudary is one of the world's leading thinkers on "platform economy." Although, the concept has variously been described as the "gig economy," "the gift economy," "the on-demand economy," and the "share economy."

Regardless of the monikers, this is an impressive book on two counts. It is concise and conceptually powerful. Indeed, it is literally a prophetic shot-across-the-bow. How ? Well, it is a warning nonetheless that the world, as we know it now, is changing rapidly. And, it is changing beyond redemption too. At this stage, no one knows for better or for worst as yet, though the optimists appear to out number the cynics.

Lesson number one in a platform economy, as opposed to Thomas Friedman's folksy assertion that the world is flat, therefore, everyone must compete on the same terrain, is essentially the simple assertion that a levelling process is taking place. But what is put into it is not competition per se, as theorists of globalization often assume, but infinite value-creation; often based on trust. Ironically, trust is deemed to be something in low quantity. Yet, the speed at which the "platform economy," is growing suggests that some kind of Reaganesque "trust but verify" process is at work. And, it is alive and well.

Indeed, AirBnB, Uber, Lyft, PayPal, Bitcoin, We Chat, Facebook, and many other platforms have grown exponentially due to the trust by which customers and users give to one another. Not unlike accepting a stranger's invitation to be a friend at Facebook, some of these companies, having verified the person in the most in-intrusive way, have begun to rent their facilities to strangers at a fee. Thus, hitherto idle properties, cars, apartments, rooms, and resources, have become suitable for economic exchange. Thus, in one bold stroke, idle facilities and inchoate ideas, have been deployed to impressive ends, often across spatial-temporal constraints.

An empty apartment in Osaka, for example, can be rented at a mere faction of the price (viz a hotel); while an empty car that belongs to the next door neighbor, can be quickly borrowed, and returned, at a mere faction of the cost.

One of the reasons why platform economy is growing, is not the rise of the coders and programmers though. If the latter had been the case, the world would have been ruled by nerds.

Rather, computers have always been around since the 1940. Indeed, when computers were first invented, they were both heavy and bulky. They can hardly squeeze into the the size of a normal room. Now that computers are increasingly be miniaturized, the reverse now is true. Computers are light, nifty and easy to use; but more so the case of smart phones that are driven by Wi-Fi.

To the degree platform economy wants to go one up, as is the case with Google and Amazon, two of the largest companies have tried drone-delivery, or, driver-less cars. Companies like Ten Cent in China, that provides the use of We Chat, a social communication app, has also switched to an electronic payment system across all terminals and platforms.

The platform economy steam-roller has arrived. Will they destroy the brick and mortar economy ? Yes, they might. If not completely, they will deter more entrepreneurs from joining the old economy, before seeing how the new ones have come in to supplant and replace the old ones.