Chris Anderson, editor-in-chief of Wired Magazine, wrote an intriguing piece dubbed The New New Economy: More Startups, Fewer Giants, Infinite Opportunity for the latest issue of Wired. Which brings me to the question: Is what we call Share Economy more or less the same animal as Anderson's New New Economy?
As you may remember, Kevin Kelly published his best-selling book New Rules for the New Economy back in 1998. While some believed this book belonged to the trash bin after the 2000-2001 burst of the dot-com bubble, it brings in fact a lot of still valid insights. Kevin Kelly now goes a lot further when he writes about The New Socialism, as he did for Wired.
At next09, there have been a lot of post-marxist reminiscences, one observer noted. Anderson and Kelly now provide us with the background story.
This crisis is not just the trough of a cycle but the end of an era. We will come out not just wiser but different.
What we have discovered over the past nine months are growing diseconomies of scale. Bigger firms are harder to run on cash flow alone, so they need more debt (oops!). Bigger companies have to place bigger bets but have less and less control over distribution and competition in an increasingly diverse marketplace. Those bets get riskier and the payoffs lower. And as Wall Street firms are learning, bigger companies are going to get more regulated, limiting their flexibility. The stars of finance are fleeing for smaller firms; it's the only place they can imagine getting anything interesting done.
As venture capitalist Paul Graham put it, "It turns out the rule 'large and disciplined organizations win' needs to have a qualification appended: 'at games that change slowly.' No one knew till change reached a sufficient speed."
The result is that the next new economy, the one rising from the ashes of this latest meltdown, will favor the small.
Take Detroit. The only way for the Big Three to survive, Charles C. Mann writes in "Beyond Detroit", is to harness the innovation of the myriad startups working on automotive technology.
Or take Google. As Steven Levy explores in "The Secrets of Googlenomics", the company deploys a bottom-up model for ad sales, dictated not by firm handshakes but by hard math.
Or even society at large. A century ago, mass collective action could be organized only by the state. Now we have the Web. Kevin Kelly resurrects socialism--without the state--in "The New Socialism".
To all the usual reasons why small companies have an advantage, from nimbleness to risk-taking, add these new ones: The rise of cloud computing means that young firms no longer have to buy their own IT equipment, which helps them avoid having to raise money or take on debt. Likewise, the webification of the supply chain in many industries, from electronics to apparel, means that even the tiniest companies can now order globally, just like the giants.
Chris Anderson: The New New Economy: More Startups, Fewer Giants, Infinite Opportunity
Kevin Kelly: The New Socialism: Global Collectivist Society Is Coming Online