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e-Disintermediation: Colleges and Corporations Beware!

Harvard and Stanford dropouts earn billions, but historically dropping out was risky business; employers demand not just talent, but academic credentials. The factory assembly line—universities manufacturing corporate jobs—was a 19th and 20th century invention. However, post-industrial age, commercially-omnipotent platforms and apps compete directly with traditional institutions.

Tell the 13,000-odd buggy whip manufacturers in 1890 that, by 2010 only one would survive (thank you Westfield Whip for beating all odds), and you’d be a laughing stock. Today, approximately 2,500 four-year colleges in the United States are closing at alarming rates, oblivious to their buggy whip future. With large corporations downsizing and outsourcing, college assembly lines now produce products with limited demand, their graduates. To the gig, sharing, barter, artisan and collaborative economies, academic degrees are unnecessary. 

What are colleges and corporations to do? Reinvent themselves. Colleges? Sell high-overhead infrastructure. Develop incredible, economically-relevant learning platforms. Corporations? Abandon top-down, asset-rich 20th century paradigms. Sell high-overhead infrastructure; focus on core competencies. Be the lean platform, not the bloated infrastructure. 


Disintermediation of Service Corporations

DISINTERMEDIATION of large, inefficient corporations underlies the so-called “sharing economy.” No longer will these corporate entities keep us apart when cheap, commercially omniscient platforms bring us together.

But people often don’t realize their own power. It’s amazing how the out-of-work, standing on the unemployment line (I did plenty of that with my musician-dad back in the early 60s) don’t communicate. While each individual has numerous skills aching to serve others, no one speaks. The Internet now broadcasts these skills.

Corporations often presume that only they can connect people with people, capital with people, and capital with capital. Wrong! Many innovative new websites connect peers with peers (P2P), rendering obsolete traditional corporations stuck with platforms that merely feed themselves business. P2P multi-platforms offer universal coverage.

If you think disintermediation is old news, confined to the banking industry, think again!


Robert Ambrogi’s Lawsites reports…

Play ball

Robert Ambrogi’s Lawsites reports that lawyer and “longtime legal website entrepreneur” Steve Fuchs has started a new site called Barterball, where individuals—lawyers included—who want to make cashless trades of services can find each other.

Members set up profiles detailing the services they have to trade along with the services they need. Readers can then search profiles—which include feedback ratings by other users—and reach out the service provider of their choice.

“In fact, as an example of how Barterball might work, Fuchs describes a DUI defense attorney whose house needs painting. A painter who lives nearby was just arrested for DUI. Offline, these two might never meet, Fuchs says, but Barterball’s technology could bring them together.”

Can Hard Currency Reduce Economic Efficiency? You Bet!

Conventional wisdom suggests that money creates economic efficiencies. But within geographically localized communities, barter can more effective. In early civilization, for example, traders operated mostly out of their own back yards and knew each other’s needs. As trade grew more complex, especially when geographical trade areas expanded, information grew imperfect, and the resulting commercial information vacuum necessitated the invention of hard currency.

Today’s cash-based economy depends on the equilibrium between customer demand and vendor capacity, but this ratio is heavily skewed with capacity far exceeding demand. The opportunity cost associated with a cash economy is staggering; perhaps $274 million per day or $100 billion per year, assuming a very modest 10% of excess capacity. Sole proprietors’ “time inventory” or overcapacity, juxtaposed to cash-poor customers, unnecessarily impedes trade and reduces communities’ standard of living.

While the velocity of money is inherently dampened by its finite supply, the velocity of trade is virtually infinite. The DUI lawyer, for example, whose house needs painting – and his neighbor, the painter, who faces DUI charges – are unlikely to know one another’s needs, except through the currency-based economy, e.g., paid advertising.

So why do communities deprive themselves of $100 billion worth of services?  They simply lack actionable information. changes all that, creating a central repository of the collective commercial consciousness.



Bartering Stuff–It’s in our DNA

CNNMoney wants to know if people will really share their things. But the real question is not whether people will share their stuff (we learn to do this in kindergarten), but rather how many people will share and to what extent? Sharing is in our self-interested DNA, so I predict, given the correct environment, people will surprise the skeptics. Google establishes that environment.

Sharing Economy… how it looks like capitalism.

This Business Insider article suggests that we are moving from a capitalist to a sharing economy, or as the headline reads,  “…future of capitalism is from competing to sharing.” But, if you think about it, capitalism, in an odd way, is based on sharing. What is capitalism if not the aggregation of assets by the few, for use by the many?

Sharing Economy & Online Reputation vs. Old Rules

While we aren’t against the state’s interest in public safety, as a practical matter, on-line reputation has more relevance to a good consumer experience than state licensure. California professionals of all kinds (hundreds of professions) are heavily regulated, but it’s not for lack of regulatory compliance that consumers get wronged.