Death Stars and GrassRoots Rebels


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The Death-Star Platforms vs Co-operation meme is the latest soap-box for the Non-Profit Industrial Complex, academic/punditry division. Uber and AirBnB disintermediate the taxi and hotel industies. They are cold-blooded, VC funded extractive businesses. But we must not misunderstand the re;atove value of their "platform" (the software) in their business model.

Yes, Uber and AirBnB have nice software platforms. It is nothing that a small team of bright and modestly experienced developers couldn't reproduce and even improve on in a matter of months. Then what?

The success depends on the platform but it is only necessary and is not, by itself, fufficient to support the kind of local or global success that these companies have achieved or dream about achieving in the long run. The platform is a piece of the puzzle, but only a piece. As one in the business of software for many years, I can say that it is by far the easiest piece of the puzzle in both of their cases.

The really big deal is the business model that says, " We are going to disintermediate the taxi industry of (say) the San Francisco and if that works out OK we will take over commercial transport world-wide." It is a totally crazy athought. San Francisco may look possible, but all commercial transport world-wide? Now there's a big dream. But you do things differrently if your long term objective is bigger than a single market and/or a single mode of transportation. You think bigger. You do a lot more homework. You infect a lot more people (sepceially "investors") with your crazy beliefs. And you act much bigger, better, and more successful than you really are (in the early going) in the belief that this is just Release 0.0.0 of your global conquest strategy.

And, it takes money. Bags and bags of wrinkled, greasy money. You have to buy popularity ... you don't have time to earn it. You have to pay for commercials endorsing you ... where the people appearing in the ads are paid actors and the words they speak or are attributed to them were written by some high-powered public relations (PF) firm. Generally, you get away with it because nobody really wants to rain on a start-up's parade (except their competition and if you are AirBnB or Uber, you don't have competition early, when it counts.) So, you manufacture positive messaging and you get away with it ... but it costs you to produce it and to get it into print, on TV and onto the Web. So, lots of money is needed.

You also need lots of money so that you can hire the legal cover you'll need. Both of these businesses assume they can ignore vast numbers of existing laws and regulations and get away with it. Their business models assume that they can operation in defiance of all the civil infrastructure put in place to "protect the citizens" from gypsy cabs and unlicensed flop-houses. Many of those laws and regulations absolutely are out-dated or simply wrong-headed but that does not make it "legal" to ignore them, to flaunt them to the extend that Uber and AirBnB have chosen. So, if you want to compete, you need to fund the lobbyists and lawyers like they do. It is key to their business model that they have the defenses to hold off prosecurion long enoug that they can convince the local population to rise up and steamroll the political process to turn them from pirates and bandits into upright business citizens. AirBnB has recently gotten San Francisco to roll over and play nice, for example. Think that was cheap and easy? I wish I knew what the total bill for that was.

This blog could go on and on about organizaiton innovations and the construction of a global management team and system almost overnight. There is more infrastructure than a software platform and it is rarely noticed compared to the pretty pages on the screen. These companies have done a lot of innovating and have spent a small fortune to buy time to change the way things are done globally.

Is there an opportunity to take advantage of their regulatory gains? Certainly. The barriers to entry for a local competitor ore actually quite modest. All the talk about Uberization of a local cab system is quite sensible and there is no reason a common "platform" couldn't be worked on to support such local endeavors. One suspects that this modest barrier to entry is well understood by Uber and AirBnB (at least their initial investors and founders). There is a serious question whether, once they've disrupted the old regulatory and cultural regimes, they won't be deluged with a next-wave of innovators in the space they are creating. Oddly, the economies of scale in these businesses are not as powerful as they are for, say, Amazon. A car is a car and a cell-phone is a cell-phone and a driver can switch apps and networks. Same with a property-owner. In fact, it is hard to understand why one would stay loyal to just one such network/platform? Other than the legalisms, I don't see a foundation of loyalty-building.

I must, unfortunately, pass up the Anti-DeathStar Platform conference at the New School this weekend. Business pressures make it impossible (we need the money). With what I write here in mind, others from the GEO readership SHOULD go and share their reactions.

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