Tag: peer-to-peer economy

Categories
Q & A

Good Deeds (Part 2)

In Part 2 of our interview, the former CEO/activist of Seventh Generation talks about how he would launch a company today, the tensions of scale, and what motivates him the most.

After leaving Seventh Generation, the company he founded and ran for twenty years, Jeffrey Hollender didn’t stop in his fight for corporate responsibility, sustainability and social equity. In Part 1 of the interview, Hollender spoke on today’s labor movement, changing the rules of business and politics, and the biggest failure at his old company. Jumping in where we left off –

So, let’s talk about large companies again – is scale ever a sustainable business model? You’ve pointed a lot to small and medium-sized companies that can’t compete. Is there a situation or model where scale can occur, but can still be meaningful and contribute positively to our society?

I don’t want to say that big is always bad, because there are many good things that large companies can do that no one else can do. Walmart, for example. If Walmart decides to eliminate a chemical from  products they sell in their stores, they can force that chemical out of commerce much more quickly and much more effectively than the government can.

So we’re in a position of tension. On the one hand, harnessing the power of large companies to do things that even the government can’t do. Yet at the same time, Walmart is a company that cost the state of California hundreds of millions of dollars because they don’t provide a broad health care coverage for their employees and thus, they go into the emergency room  and the state of California calculated that that costs hundreds of millions of dollars.

When you have a dynamic that is set up where the only things that matters and the only things that get measured is the maximization of profits, you have a conflict between what’s best for society and what’s best for investors.

And the notion that the marketplace will take care of it all is a complete fallacy because there is no free market. There never was a free market. And we have a market that is designed to do certain things, to benefit certain companies and certain products and certain services. We need to change the way that system of benefits works so that it more broadly serves society and doesn’t only serve a handful a companies.

That plays in well to the next topic I wanted to address. The Internet allows us to have more currencies than simply money – there’s reputation, authority, data, etc. that allow us to exchange value in a way we don’t in the non-interneted world. I’m curious, do you think technology can change how our current system of benefits works?

We already have many, if not most, of the solutions we need to get the world headed in the right direction. It’s not that we don’t have the technology to produce clean energy. It’s that we have a system of subsidies and incentives that subsidize and incentivize the wrong kind of energy production.

While I see technology playing a role in solving many of the most difficult and challenging problems we face, I don’t think at the moment we have to wait for technology. I think we to again stop incentivizing and supporting the wrong technology and support the right technology.

I think the peer-to-peer economy is one important piece of the economic transition we need to make. But there are other important pieces as well. I think that we have to transition to an economy where we don’t have employees, where we have worker-owners. We live in an economy where most of the wealth of that is created by business ends up in the hands of very few people. We have a more unequal society than Egypt or Tunisia. That’s a dangerous situation from a social perspective and to my mind, one of the biggest and quickest ways we can address that is to transition and create businesses where ownership in those businesses is more widely held, so as value is generated, we lift all the people who are working, rather than few people at the top of the corporation or the outside capital that comes in to finance the business.

I am interested in legacy lately. Do you want to leave a legacy? If so, what do you want your legacy to be?

I honestly have never– I’m not entirely sure what legacy is about. I think a little bit more about responsibility and I feel that I have a responsibly to make a contribution to society and to the world that may leave a legacy but that legacy doesn’t particularly motivate me. I’m more motivated by seeing someone smile and the feedback one can get by doing good deeds, than how those deeds will be viewed after I’m gone.

At my full-time job, I work for Alice.com, a start-up that allows CPG manufacturers to sell directly to the consumer. As a result, I’m interested in the rise of private label and the fact that retailers hold all the data. Is there enough shelf space for the really cool innovative products? Or will that become an issue?

Well, I mean today, there is already not enough shelf space. We live in a world where shelf space is largely controlled by large companies, and I’ve found it increasingly difficult for small innovative brands to get shelf space. And I think that the solution is the internet. If I was launching a business today, I might entirely skip trying to get it on the shelves of stores and go directly to consumers online. The store has a limited number of square feet in which they can sell stuff, and by the very nature of that limited space, there is going to be limited variety.

You know when you talk about technology… we want to balance, on the one hand, and support our local retailers because they’re anchors in our community; they create jobs and yet there are many things that we won’t be able to get from our local retailers that we can access online.

I’m glad you brought up the tension between local retailers and the Internet. I think we need to wrap this up. Is there a question I should have asked, but didn’t? Or that you wish others would ask? This is your chance to get whatever you want to say out there.

Yeah, I’ll give you one or two concluding thoughts. One of the things that concerns me deeply is the fragmentation and compartmentalization of the world. We have lost the ability in many cases to see the connection between things as we become increasingly focused and increasingly specialized. As we become so focused, we lose sight of the unintended consequences of many of the things we may do or many of the things that we may support. And I think there’s a greater need today than there ever has been for us to look at the whole system. And to look at the impacts of what that system produces and the way we’ve designed that system. Albeit, that is a way of thinking that few of us have been taught to do.

The other side of that coin is that when we look at the landscape of organizations, particularly NGOs that are trying to solve problems that the world faces, we have millions of organizations that seem largely incapable of working together and do a better job of competing amongst themselves and a new sense of cooperation is absolutely critical to address the problems we’re facing.

We can’t think of something like global warming as an environmental problem. Global warming is as much an economic problem and a health problem as it is an environmental problem. And when we look at it through a single lens, we won’t understand and we won’t develop strategies to change it in a lasting fashion.

Categories
Economies

Browsing Toward a New Currency

Air on MacBookPhoto: kayakleader

This is a continuation of How the iPad is (Thankfully) Destroying Our Economy.

Historically, money wasn’t necessary. Within a community, barn raisings, shared child care, and borrowing tools all occured as part of the gift economy. You used trust, reputation, and identity as your currency and money was only used between communities that didn’t know each other.

(Money is a type of currency; it isn’t synonymous.)

This is essentially the same today.  My neighbor will give me his lawnmower or I can go buy one at Home Depot. In the transaction with my neighbor, we might say I got the lawnmower for free, but really I used our relationship as currency. In the transaction with Home Depot, I used money.

Money only exists because traditionally – and this is important – you haven’t been able to scale the gift economy. The bigger your neighborhood gets, the more difficult it is to know everyone. The more difficult it is to know, the more difficult it is to trust. As strangers, and without trust, we need a way to exchange value.

Whereas the gift economy might leave loose ends (relationships are messy, after all), an economy based on the exchange of money leaves no loose ends; it is something for something. Our current economy is built on that idea of quid pro quo, but the Internet came along and turned that on it’s head for a few reasons, some of which we’ve talked about:

1.  The Internet allows us to live by our screens, not among objects, decreasing materialism and increasing the value we put on knowledge and experiences.
2.  The decentralized web increases the viability of the peer-to-peer economy that doesn’t rely on or include large companies.
3.  The networked web is ruled by plentitude, not scarcity, which changes what we value, how we exchange value, and how we measure and acknowledge it.

In essence, the web allows our social architecture to scale. What that means is that for the first time ever, there is the potential for an economy that isn’t based on money. It means that currencies other than money – reputation, identity, data – can be used to exchange value on a peer-to-peer level and on a larger scale than ever before. And it means that we’re relying less and less on money as a currency (i.e., why we’re seeing our current economy collapse).

Take a moment to wrap your head around that; it’s exciting. Or possibly scary, depending on how you look at it.

“Trust networks are able to be tapped for recommendations and referrals, while predictive analysis algorhithms can suggest the kinds of people, products, services, or events that would resonate with our personalities or value set,” argues digital theorist Vanessa Miemis. “A new set of filtering tools are emerging that are shaping where we direct our attention and resources, namely intentions and actions… These contextual clues around data become currencies in themselves, as they give us more information in order to make a choice or decide who to trust.”

Soon, it won’t matter that I don’t know you. We will still be able to transact with each other – I’ll borrow a dress from you, or you’ll take a spin in my car – because our reputation, identity and data currency will travel with us. The goodwill you build on Twitter, or at your job as an insurance salesman, will inherently influence the transactions in your life.

Early efforts at the peer-to-peer web, eBay rankings or reviews on Etsy for instance, show a small piece of that reputation currency. You can also see some attempts at personalization on today’s web. But that’s really all only the beginning. Facebook, for instance, has the power to be the ultimate bank, building a new economy based on the identity information we feed into our profiles and the mass amount of data they’re collecting. Even better, if this type of data were open across the web and we could own it, these currencies could inform the foundational underpinning of our interactions. And then, well, I can’t even wrap my mind around those possibilities…

You can see why who has the most data, and who controls the data, is increasingly important then. Every byte is almost like a dime in this new economy we’re building on the web.

I’ll continue to dive deeper in this series on digital economies and currencies in future posts, including the drawbacks of reputation as currency, why these new currencies aren’t the same as Free, and the rocky transition time we have ahead of us in this half-changed world.

Categories
Economies

How the iPad is (Thankfully) Destroying Our Economy

iPad 2 - HomescreenPhoto: connorsmac

There are a cohort of people who are still buying McMansions in the suburbs; I see the photos on Facebook, “Our New Home!” revealing beige wall-to-wall carpeting (still mysteriously associated with upward mobility), reminiscent of the early 90s, chosen to soften the echoes of monstrously high ceilings usually reserved for public spaces. The outside of the home is similarly beige with french windows framed by a brick veneer and a peaked roof that inevitably evokes some strange sense of American pride and envy… for it does look nice if you’re just glancing by in a car.

But despite the constant commercial endorsement of this wearisome American Dream, such idyllic photos no longer sway the hearts or pocketbooks of the majority of young people who have made it clear they will not be the ones to save the housing market. Even the young billionaire Mark Zuckerburg rents, and in the city, not the suburbs.

It wasn’t too long ago that people flaunted materialism. “Goods [were] exclusive or status related rather than universal, private rather than public” reports economist Tyler Cowen. But whereas the automobile enabled freedom for previous generations, today’s generation use digital devices as a means for self expression. That has made possible an economy focused on knowledge and experiences, not consumer goods.

E-book author Ev Bogue took a photo of every single item he owns and encourages visitors to his site to “count, there aren’t many.” His belongings total a fundamental 32 things. Bogue is a proponent of augmented humanity, and encourages his readers to “cultivate presence at the intersection of life and Instagr.am,” a popular iPhone photo app.

“The incentive with these apps is to live a more extraordinary and present life,” Bogue argues. “If you aren’t living, there’s nothing much to Instagr.am, and thus people will forget about you. No one necessarily wants to see an Instagr.am of a desk. We know this, so I don’t often see photos of desks on Instagr.am.”

While Bogue may fall on the side of extreme in the experience economy for his privileged stylings, his penchant for walks in the forest over a new dining set is shared by his peers. We prefer to live by our screens, not among objects, and so the knowledge economy is just that – in our minds (and on our iPads) and not in the revenue-generating sector of the economy.“The funny thing is,” Cowen argues, “getting away from materialism on such a large scale – whatever the virtues of the switch – really, really hurts. It is the hurt that we in America are living right now.”

We assumed innovation would arrive the way it always has, but technology gave innovation new forms, and insistence on the-way-it-always-was kind of economy subsequently delivered the situation we’re in today: a growing income inequality, stagnant median income, and the financial crisis.

Cowen admits “you can be an optimist when it comes to our happiness and personal growth yet still be a pessimist when it comes to generating economic revenue or paying back our financial debts,” and “even if we can, at the personal level, manage to feel fulfilled under slower economic growth, it is not compatible with how modern politics [and economics] is structured, namely as a ravenous beast.”

Obviously Cowen knows something screwy is happening. But for all of Cowen’s awareness of trying to fit a square peg into a round hole, he never goes as far to eschew the current economic framework, a system simply not suited for a knowledge and experience-based economy.

That system is legacy-based, and its “operating system for money is obsolete,” argues media theorist Douglas Rushkoff. “It is optimized for a different era than the one we are living in today. It is incompatible with Web 2.0 and the Interneted world.”

The Internet has allowed an economy where money, the dependency and abstraction of which has caused the financial crisis, is not the singular centralized currency. On the decentralized web, reputation is a currency. Authority is another. Data, influence, badges, credits and identity are also currencies. There are several currencies on the free and open web in fact – none of which are widely recognized at J. Crew. Increasingly that’s because the point is not to exchange value for consumer goods, but for the stuff inside our screens.

I’ll take a deeper dive into the economy and currencies our digital lives are creating in part two of this post later this week.

Categories
e-Commerce

Why E-Commerce Needs to Stop Aggregation and Start Getting Social

Most of us would agree that the internet is biased towards social connection, yet many e-commerce or f-commerce experiences are not. In the olden days, bazaars weren’t only about consuming “stuff,” but were a social space to meet up with friends and exchange information.

Today, instead of a peer-to-peer economy, we have relationships with our brands. We don’t learn what’s happening in our world, but instead learn how much smaller the new iPad is.

The mom blogosphere in particular has risen to fill that void, up to a point. Bloggers and readers exchange ideas, rumors and facts that matter to them, but companies quickly co-opt the majority of well-intentioned blogs to sell more stuff instead of creating more social value. Ultimately, such actions have degraded blogs to what we have today: a list of product features and giveaways.

Companies do this because of their inability to embrace nuance, being solely dedicated to the dollar. You can see this play out in how companies structure themselves. Many companies create an e-commerce site that is simply an inventory list with no social value whatsoever. This means that many other companies can then take advantage of those sites because they don’t offer anything except a price on a product. So those other companies rise up another level of abstraction and become a search engine or aggregator, which creates even less value than before.

What we’re seeing now, as a result of the recession, is that you can’t just keep abstracting how you make money at a higher and higher level. Indeed, each time we distance ourselves from the most basic of human interactions – that is, a face-to-face conversation – the more dangerous it is for our economy.

Take a look at Appaloosa, a hedge fund that employs 250 people and Apple, a company that employs about 35,000 people and earned around $6 billion in 2009. “Appaloosa, the hedge fund, earned about as much as Apple in 2009 by speculating on… well, we don’t really know,” argues Jeffrey Hollender.

And many would argue it was just that kind of speculation – or abstraction – that got us into all of our financial problems in the first place.

For e-commerce and f-commerce, this means an opportunity to pivot to new models by combining commerce with community to replicate the peer-to-peer economy, where value isn’t limited to dollars and point of sale, but expands to include the concept of sharing and access just as it would in real life.

Ultimately, that is what every e-commerce site should be doing – not attempting a relationship between brand and customer, but enabling connections and conversations between customers.

Which even in this age of social media, very few companies do successfully.