Talk: Technology just killed the company - all hail the platforms
During the last couple of years «sharing economy», «millennials» and «digital natives» are all words that have transitioned from tech hype to the daily language. We have seen an extreme growth of platforms which allow «normal people» to share, rent and sell both their belongings and their services. We all know the examples such as Uber, Lyft and AirBnb - just to name a few.
Some attribute the success of these platforms to character features of the previously mentioned millennials. That they are fundamentally different to previous generations. That they prefer to freelance, are addicted to technology and prefer sharing over owning. Personally, I believe that the trend we are witnessing is more related to the development of technology platforms and the opportunities that they bring, rather than labels we can place on a specific set of people.
The technology part has received a fascinating small amount of focus when it really has been the driver of the sharing economy. The sharing economy is just a consequence of that we finally have the tools to find others than the big companies. It is the software platforms that are the really interesting stuff. The platforms create an infrastructure that allow for collaboration and interaction between end users. This is the infrastructure which allow you to share your car, your ride, apartment or your tools.
These two-sided markets are also interesting from a network effect perspective, where it pays off to be an actor in a network with a lot of participants on the other side of the market. This is commonly seen in the sharing economy and can explain why some platforms achieve almost a monopoly status while still competing in the free market. If I have an apartment I want to rent out, I’m more likely to put it out on AirBnb if it has a lot more users than similar platforms.
Now - what effect will these platforms have on today's companies? The hotel and taxi business are surely in trouble, but what about everyone else? Going back to the fundamental article by Ronald Coase in 1937 - «The Nature of the Firm» - why do companies exist? Coase’s hypothesis was that companies exist primarily because of the transaction costs of using a market. What the platforms and the sharing economy have done is to reduce the transaction cost dramatically. In fact, the costs have been reduced to a level where it might make more sense to have an economy of freelancers rather than employees.
This presentation will give an introduction to the fundamentals behind the platform economy and how it might threaten or even replace the company structures we have today. It will share some facts and theories on what has happened so far, as well as an outlook on what to expect next.