Sangeet Paul Choudary is one of the world’s leading thinkers on “platform economy.” The concept has also 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 a prophetic shot-across-the-bow. How? Well, it is a warning that the world as we know it is changing rapidly. It is changing beyond redemption.. At this stage, no one knows for better or worse as yet, though the optimists appear to outnumber 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 a most 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. 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 fraction 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 fraction of the cost of a car rental or taxi. .
One of the reasons why the platform economy is growing, is not the rise of the coders and programmers.. If the latter had been the case, the world would have been ruled by nerds.
Rather, computers have been around since the 1940s. Indeed, when computers were first invented, they were both heavy and bulky. They could hardly squeeze into the size of a normal room. Now that computers are increasingly being miniaturized, the reverse holds true. Computers are light, nifty and easy to use; more so in the case of smartphones that are driven by Wi-Fi.
To the degree the 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 provide the use of We Chat, a social communication app, have also switched to an electronic payment system across all terminals and platforms.
The platform economy steamroller 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.