We lack venture capitalists with a macro-view of the world.
Exploiting freedom
Free-market principles are over 400 years old when the Dutch started selling tulips using a manual auctioning system. eBay has done a masterful job of bringing this age-old success to the internet in selling person-to-person goods. The benefit of eBay is macroeconomic, not technology (or user ‘friendliness’).
That may be the reason why it barely escaped the (2-3) veto at Benchmark Capital. The success of free-market principles can be extended to many verticals, and it remains a big surprise to me that eBay has not delved into other verticals using these hard-earned principles.
Trust but verify
Recently, a new job site The Ladders where I posted my resume (for research purposes on marketplaces), raised capital with a new approach to job search. Instead of charging recruiters it charges the job seeker (specifically the ones above $100K/year salary) a price for access to the premium jobs on the site. A nice concept but how do we know that instead of trusting the applicant, we can now trust the recruiters?
Are these posts for real? How are recruiters held accountable? How do I know if my data is not abused? As NY attorney general Eliot Spitzer declares:
“For a market to be truly free and efficient and have the full confidence of its participants two things are required: integrity and transparency” — Eliot Spitzer
Why would I trust a job site that does not tell me what transactions are committed? Would I be drawn to eBay if I did not know what products sell for?
Principle theory
Free market principles will change the record industry; new players like Apple have implemented the first phase of a free-market for music. Without genuinely recognizing it, the record labels are participating in a movement in which labels no longer produce the stars, but people produce stars. But Apple needed the labels to draw the participants into its marketplace first.
Open-source represents another form of free-market principles. Virtually unlimited software development supply is matched with the diverse appetite for the Linux operating system. Why are we still entrusting the publishing of books to the demi-cartel of the book publisher? You can publish books in Audible on iTunes, and the software is ready today to publish Adobe’s PDF format (yes, in iTunes). What stops Apple from becoming the media hub where free market principles apply to any data type and buyers can tap into the Pareto and Long Tail supply simultaneously?
Evolution matters
There are some real hurdles. Hurdles that require capital and domain expertise plus VC’s to fund them. But we need a different VC, not the technology nut who wants to send a new rocket into space, but one who understands the power of evolution.
