Industrial Capitalism vs Collaborative Economy

Here are the slides for the talk on the collaborative economy I gave at TEDx Harlem. As soon as I get a nice video of that talk, I'll post it. Here are the words that go with the slides.


TEDx Harlem 
A couple of weeks ago, the Encyclopedia Brittanica announced that it would stop publishing its print edition, after 244 years. That is a long time. It feels like the end of an era. “This has nothing to do with Wikipedia or Google” said its President. Maybe. Maybe it is just part of the diminished demand for print. Or maybe that it is really hard to compete with the 145,000 people who actively worked on wikipedia last month. I went and looked up their stats -- at the source of course -- 4m articles in English; 270 different-language wikipedias. How can you compete with that? The encylopaedia brittanica’s announcement is just another part in a trend I’ve been observing and thinking about. It is another sign that we are moving from Industrial Capitalism to a Collaborative Economy.

Over the last couple hundred years, industrialization honed a specific kind of capitalism. Companies were centralied and hierarchical. With Encyclpiedia Brittanica, I’m sure there is a small number of article writers and editors; each with their own area of expertise -- no doubt rightly deserved. But they would never ever imagine letting unvetted people -- lots of them, and unknown! -- write or edit articles. Wikipedia turned this idea on its head. It is distributed -- meaning that the writers are everywhere, and they are self selecting. They participate because they feel like it.

The result is an enormous diversity of editors and expertise. A collaborative economy thrives on this diversity. It is endlessly experimenting, learning, adapting, and evolving. Industrial capitalism is the opposite. Standardization within a company -- a form of monoculture -- is how it saves money, reduces costs, and becomes the dominant producer. And once it is dominant, it hates change. Changes costs money and is uncertain, so it will do everything to defend the status quo.

I have to add in here a quick caveat. I don’t really think there are two opposing economies at work, or that things are so cut and dried. There is lots and lots of grey. I do think that we have pretty much maxed out on the benefits to be gleaned from the Industrial Capitalism approach. The worldwide Occupy movement attests to that. Pre-industrial revolution the vast majority of us lived in hovels, but hey! we were self employed! Today, 50 percent of the private sector workforce works for BIG companies, and those big companies control vastly more than 50% of the wealth, and political power. The signature of the collaborative economy is an increasing role for individuals. There is LOTS to be gained from this approach, and we will see more and more of it that thanks to the internet. OK, so now back to painting things in black and white, so that the contrasts are nice and clear.

Bell Telephone, founded in 1877, and then bought by AT&T in 1899. It was built on its huge trove of patents and grew bigger and bigger. At one point, it had over 1 million people working for it. It was broken up in 1984. It was broken up into 7 baby bells. But now, one of these babies, ATT, is itself the 7th largest company in the US. Think of all the money and infrastructure and effort and people it took to build that company over the last 150 years!

Contrast that with Skype. Skype is 9 years old, and have 663m registered users. They built a huge telco without paying for or building out the physical infrastructure! Instead, we individuals all happily contributed. It is our internet connections, our personal computers, and our video cameras of individuals. Stuff we’ve already paid for. so what do we learn?

That Industrial capitalism seeks monopoly status and control -- the more the companies have, the more they control, using their closed proprietary systems and way of doing things, the better. Which is in contrast to the collaborative economy. These companies get bigger by maximizing participation -- usually through openness.

In fact, a big piece of the collaborative economy is built on the economics of free. By that I mean assets that have been already bought and paid for (like Skype), or excess capacity (like Wikipedia). If you as a company want to take advantage of these great resources, you have to be open, and willing to cooperate. Industrial capitalism makes its money on either scale -- getting so incredibly big that it can manufacture things very cheaply -- or by keeping its expertise very close through trade secrets and patents that it lets others use at great expense.

Because Flickr is such a Peers Incorporated company, I had to put them in here. the industrial capitalism way of doing things would be Getty images, with 80m images. The collaborative economy way of doing it gives us Flickr, which has amassed 6 billion images in just 7 years. And you have to say that the Flickr images more accurately portray the world as it really is.

There is Network TV as opposed to YouTube. YouTube has more video uploaded each month, than the 3 major networks created in 60 years. Is a lot of this stuff junk? Yes, absolutely, but so is the “Bachelorette”.

We see the collaborative economy in every sector. Even banking. Prosper is a company in which individuals lend money to other individuals. It is 7 years old and already has 1.3 million members. It has made $314m of loans. If one of those lending individuals goes bankrupt -- it isn’t the end of the world.

The collaborative Economy is delightfully resilient. Industrial Capitalism, with its huge behemoths, produces companies that are “too big to fail.” Yet we know they will one day. While both systems could share value better with individuals, it seems that the collaborative economy is the one that will do it -- because remember, it seeks to maximize the participation of others, and if its going to succeed in the long run, it has to share more equitably. We will see more and more web-based companies that partner with individuals to help them make money.

I heard this great anecdote: my father had one job in his lifetime; I’ll have 7 jobs in mine, and my child will have 7 at the same time. The value sharing partnership between a web-based company and individuals will form a significant part of our economy future.

I recently founded a company called Buzzcar. We operate in France, and will be opening here in New York shortly. With Buzzcar, car owners can rent out their cars to their friends and neighbors in a safe, secure, and standardized way. I think of the car owners as Auto-preneurs, and they get 65% of the revenue generated, in contrast to the business model of traditional car sharing and car rental companies. Buzzcar builds the technology, operational, communications, and contractual support, sets a minimum standard for good drivers and safe cars, insures each car and person during the rental and with 24-hour roadside assistance, and does the payment collections. The owner is in charge of his car, and inviting his friends and neighbors to share his car. And he can make about $1000/month. You can see that we have all types of owners and cars, and all types of drivers too.

I have a goal of getting everyone to share their cars, dramatically reducing the numbers of cars needed to satisfy a given population, dramatically reducing the numbers of parked cars that clog our city streets and make our homes expensive, and dramatically reducing the enormous bite car transportation takes out of personal budgets.

And I know that the collaborative economy approach can work, even in a sector that seems so suited to big huge projects, because of my colleagues at carpooling.com. They are a 10 year old German company that provides ridesharing services throughout Europe, and shortly the US. Every single day, they transport as many people as would fill 130 Amtrak trains. Every month, they have more than 1 million people sharing trips. In fact, Carpooling.com, and the car drivers and the riding passengers, move more people than travel the length of Amtraks’ NE corridor.

Something that I haven’t yet mentioned, but that is really dear to my heart, is the fact that in the collaborative economy, one dollar is not like another dollar. The social intangibles are visible and valued. One of Buzzcar’s borrowers had mentioned to the car owner, that they were using the car to get to an Island ferry. The owner sent her an email with a list of the island highlights -- where to go and what to see. You won’t find that level of personalization and customization in the Industrial capitalism model. It costs too much money.

Some more examples: -- the mainstream media vs the blogosphere -- here is a short list of companies, many of which you’ll recognize, that are bringing us this new economic model. (airbnb, etsy, eBay, fiverr, topcoder, zilok, rentallic)

And to close with a final lovely example: we can contrast Google Maps with Open street maps. Google maps, which I know, use, and love, was created with a car driving on every single road in the world and mapping them all. that is a big job! We can contrast that with Open Street maps, that created the same with local hobbyists build out the open street map platform. Today, Open street maps offers maps that are as good -- and they think better -- than Google’s. Why? Because, just like wikipedia, they have thousands of people updating them each and every day.

When the Haiti Earthquake struck and the emergency responders flooded in, it was impossible for them to find their way through the city that had been poorly mapped, and those existing maps were clearly completely out-of-date for what was needed. With the help of a group called Crisis Mappers Net and released satellite photos, this group of people drew in the map of Port-au-Prince over the subsequent week, you can see them working.

To sum it all up, Industrial Capitalism is built and evolved to put the corporation’s survival a the center. I hope you enjoy those empty, headless suits I found. And now, thanks to the Internet, we see the rise of a collaborative economy, that puts people at the center.

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Tapping End User Content (2.0) for Speed & Scale

In the spring I gave a number of talks on how web 2.0 should really be talked about as 2.0 -- platforms for participation that invite and enable end-users to add their own content. Letting people tap into their own excess capacity is particularly potent because it is so low cost. And the platforms mean that this small and local content can be scaled to national and international proportions and influence.

Quickly.

IF you can get the platform right.

The video is a 4 minute edited synopsis of a 20 minute talk I gave at Columbia Unviersity a number of weeks ago for their Brite conference (Brands, Innovation, Technology). I reference chatroullette and couch surfing, both excellent examples of the phenomenon. 350.org does an excellent job of this as well.

Related blog posts of mine:
How Sharing Increases Innovation
Thinking about Scarcity & Abundance

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Cars are like 2-liter Sodas

Two-liter sodas are meant for parties: to be consumed by lots of people on special occasions and in a short period of time. If you buy a 2-liter soda under other conditions, you usually end up drinking too much yourself or letting some go to waste.

Cars are like that. Despite the fact that we usually drive alone, and that we don’t drive 24, or even 12, and not even 6 hours a day, cars are only sold in the big gulp size. And so, we consume them too much in our efforts to get our money’s worth, and lots of our car’s value goes to waste.

Traditional carsharing lets some people consume just the amount of car they want. But small-minded documents (leases and insurance documents) make it illegal to share your own car with someone else for money, or to formally pay an individual to use their car.
If we want to have fewer cars in cities and towns, and fewer cars mined out of the ground, stored on our streets, and returned to landfills, we need to create the insurance and regulatory means by which this kind of just-right consumption is possible.

Ditto for sharing car rides, for which it is also illegal in most countries to pay for the driver’s time and effort in addition to defraying some of his car costs. A California start-up Spride Ride has found a legislator who is trying to address some of these problems, but it is one state, and even that bill isn’t going far enough.

Legislators and policy-makers around the world: realize that some people want single-sized servings of cars and rides – or maybe even the opportunity to buy a 6-pack of individual servings – but only some of us want the 2-liter bottle. And unless you think the government or big business can provide those individual car-servings in every geography and to every desiring population, you’d do best to get rid of those barriers so that some us can serve up our excess car capacity and sell it to our neighbors.

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Thinking about Scarcity & Abundance

I keep turning the concepts scarcity and abundance in my head. Mind games are tidier when you think in the purest, most extreme forms. Let's consider the human condition to be constant flight from scarcity and constant seeking of abundance. There are two ways to get to that abundance:

I get some stuff, call it mine, and guard it. Now I’m in control. The more stuff I call my own, the safer I am from a world of scarcity. Just about everybody in America and most capitalist societies can identify with this instinct. And the result is that we are incredible hoarders and have recently doubled the amount of physical stuff we buy, doubled the weight of stuff we put into landfills, and built huge amounts of stuff-storage facilities across our country (see Juliet Schorr’s work).

Our legal systems and corporate protection of intellectual property follows these same instincts. We write patents to be absolutely as broad as possible so that someday, we’ll have access to any future value that might possibly be found in these ideas – whether or not we think up this future value, whether it is in our area of business, whether or not it is in our geography of interest. All ours.

Another perspective on scarcity-avoidance is exactly the opposite. Everything I get, I pool with my community. It is all ours. When things are going good, I contribute. When things are going badly, I am protected by the good fortune of others in my community. We recognize this approach in socialist and communist societies.

It’s curious that both approaches are trying to protect and maximize periods of abundance, and they are exactly opposite from one another.

Academics have refined the idea of stuff to think about “rivalrous” as opposed to “non-rivalrous” goods. Rivalrous goods are ones that we can’t use at the same time, or that get used up. My stash of fancy English toffee is rivalrous. If I don’t hide it, my kids will see it as something available to the “family community” and eat it all up. My abundance quickly becomes my scarcity. Conversely, sitting in the sun on a beautiful spring day: non-rivalrous. Plenty of sun, plenty of space.
Once upon a time, TV viewing was rivalrous. Your oldest brother always got to choose, and that was it. Today, we have Tivo, we have hulu, we have many TVs and PCs. TV-show watching is non-rivalrous.

Zipcar is another example of how we turned what was perceived as a rivalrous good – cars, that I needed to own in order to feel abundance – into a (mostly) non-rivalrous one. There is always a car around the corner when you need it; why bother to own one and have it sit idle much of the day?

So what do I conclude about the Western solution to our search for abundance through ownership?

1. Not everything is rivalrous, even though our knee-jerk reaction is to treat everything this way.
2. There is a lot of wasted value – an enormous amount of excess capacity is going idle because of our erroneous prejudice.
3. Technology can turn rivalrous goods into non-rivalrous ones.

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Creating the Conditions for Explosive Innovation

Here is the most succinct description of how I think we can drive innovation, economic development, and spur our world on to the new low-carbon economy.

One of the reasons to make anything more open is the admission that there is more value to be extracted. Whatever we are talking about is underused. So in my mind, “open” implies “excess capacity.”

There are also levels of openness. Some kinds of open mean that certain people, with specific attributes (enough money, enough expertise) can participate in the newly opened asset. Other kinds of openness dramatically change the equation of who can participate: this kind of openness reduces the cost of participation and the level of expertise required to participate and therefore is game-changing, especially in the number of people who choose to engage.

Examples:

Guest bedrooms -> hotels -> couchsurfing (in 10 years since its founding, beds are now available to visitors in 55,000 cities in 231 countries – try that private sector!)

Ma bell phones -> cellphones -> iphone (in 2.5 years since its market entry, over 100,000 applications have been made)

Cars with fixed ownership & fixed wireless offerings ->
Zipcar/TomTom/Sync ->
multi-purpose open devices inviting creation of an infinite number of apps (who knows? We have yet to produce an open in-vehicle after-market platform)

Single-purpose wireless devices ->
Extensible malleable wireless devices ->
Open wireless devices with a mesh communications protocol (ubiquitous low cost local data transmission worldwide!)

This idea has important implications. For companies, opening up some platforms is a way they can farm for innovation cheaply. Losing ideas lose on their own R&D dollars. Winning ideas can be purchased by the platform-providing company. Voila! low cost R&D with 100% success rates!

For governments, the implications are much more far reaching. If a government seeks to maximize the private sector or individual gain from its expenditures, it should open up as many of its technology investments as possible. It should seek to lower the cost and expertise barriers for participation, with the resulting explosion of uses and innovations on the underlying platform.

This is why I have been advocating that government technology purchases require that excess network capacity be make open, that devices chosen be non-proprietary and able to be multi-purpose, that open standards and internet protocol be used.

Related posts:
Lowering Barriers to Innovation in Cars
Creating an Open In-Vehicle Platform
Open Platforms, Smart Grid & Smart Transportation
Whats "open" got to do with it?
Time for Cooperative Capitalism
Technology Recommendations for Congestion Pricing

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The new GM could get it right

I just read a fascinating blogpost by Bernard Avishai describing a GM electric power-train called Voltec. I read that first sentence and laugh. Fascinating power-train? Puh-lease.

But Bernard writes:

"GM has a chance to become the software powerhouse of the newest new economy...a design hub and anchor for hundreds of new software solutions companies that will focus on the tiers of communication the electric car portends: battery-pack to vehicle, vehicle to electric utility, and utility to sources of renewable energy."

This is definitely going in the right direction. The question will be, will GM take this vision all the way? -- making its communications protocols and vehicle APIs open to everyone? As some of you know, GM's OnStar is my poster child for a great idea that failed because they kept it closed. [My oft-repeated line: OnStar is like having a smartphone that can only call your mom. Sure, I like calling my mom, but there are thousands of other people and other uses I'd put the phone to if they'd open it up.]

Ultimately, we need to connect and open up for innovation all car data (remember, no one could actually do anything to your car without your explicit permission). We also need the communication protocols to include a peer-to-peer mesh, and imagine, as GM begins to, that data is data, and therefore this protocol is good not just for smart cars, and the smart grid, but for smart infrastructure, smart governments, and smart people as well.

Related articles and blog posts I've written on this subject:
On connecting everything up in this Wired article
On what the car companies should do to dig themselves out, in this Fast Company piece.
On why open is the right choice in this blogpost.

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Open Platforms, Smart transportation & smart grid

Nice Treehugger podcast interview with me that explains my vision on the how and why of open platforms for cars, the connection to the smart grid, and how creating a mobile internet can become an engine for economic development. Phew, all that in 15 (?) minutes.

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Radio Spectrum & the Internet Story made simple

Here is a brilliantly written article, that explains in clear language using powerful metaphors, exactly what makes the internet, openness, and wireless communications so beautiful, so powerful, and so filled with potential. If you are remotely interested in these topics, you should read it – just a couple of pages published in Salon.

Dare I give some highlights? giving you an out from reading the whole piece? They are better in context:

“Here Reed is dogmatically undogmatic: "Attempting to decide what is the best architecture before using it always fails. Always.”…If you want to maximize the utility of a network,… you should move as many services as feasible out of the network itself.”

This is the opportunity we have before us in thinking about how we build out the smart grid, and road user fees. Both huge and ubiquitous wireless networks that will roll out across the US over the next decade.

“Reed and his colleagues argued, keep the network unoptimized for specific services so that it's optimized for enabling innovation by the network's users (the "ends").
That deep architectural principle is at the core of the Internet's value: Anyone with a good idea can implement a service and offer it over the network instead of having to propose it to the "owners" of the network and waiting for them to implement it. If the phone network were like the Internet, we wouldn't have had to wait 10 years to get caller I.D.; it would have been put together in one morning, implemented in the afternoon, and braced for competitive offerings by dinnertime.”

Ok, did I neglect to mention that this article is 6 years old? And that it was written by two friends of mine? No matter. It is a must read. Here is the link again. Hey, I only read it the first time myself this morning.

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What’s “Open” Got to Do with It?

In early March, I happened to be in Washington meeting with Ed Markey. It turns out that the incredibly important words that required the $6.6 billion in smart grid demonstration projects to use "open standards and internet protocol" was his amendment! These words were modified in the final Economic Recovery Act by industry lobbyists to include "where available and appropriate."

I was in Markey’s office to explain to him why these same words should be applied to wireless demonstration projects in the transportation sector, in health care digitization efforts, and likely in education, although I don’t know. Markey was excited by my interest, and wondered if I could explain to the layperson why open standards mattered.

A week and a half later, I bumped into a state Secretary of Energy – one of the very people who would get to spend the smart grid demonstration project money. This person didn’t understand the implications of “open standards” and asked me to explain it. Over the course of the last month, I’ve met with high level officials in transportation, energy, and environment positions from several states, none of whom understood the value of openness.

We are about to spend billions and billions of taxpayer dollars on technology infrastructure and many of those advising precisely what to buy have every incentive to say that closed proprietary systems, networks, devices are the best way to go. How does this missed opportunity make you feel?

A friend blogged on this subject and I loved his headline:
Using Public Dollars to Build Proprietary Systems?

Proprietary systems have their own secret languages and secret rules. You can play only if you are invited in (by buying the ratified stuff) and you can only play the games agreed upon (your ideas for new games or new ways to play the old games are unwelcome, unheard, and impossible to incorporate). Examples of closed proprietary systems abound, but a nice irritating example would be how you have to throw away your current cell phone if you want to change carriers.

Open standards mean that different people/companies/devices could, if they wanted to, find common ground.

Here, excerpted from a piece David Reed wrote for The MIT Communications Futures Program Principal Investigator Blog is a nice description of how the internet -- which is an open standard -- works:

“The Internet is a set of agreements among members (who happen to control small, medium, and large networks). The agreement required members to carry each others’ packets, delivering them via best efforts to the hosts at the edge of the network—your laptop, Google’s server…each member of the Internet who contributed to the mutual enterprise gained connectivity disproportionate to the member’s contribution.”

As David puts it, "The Internet is not a technology, but a set of interoperable standards."

Open standards give the ability to evolve over time.

Sure, proprietary systems can evolve, the speed depending entirely on competitive pressures. Most government contracts come with nice long contracts: three, five, ten, and even 99 year terms! Why bother to innovate during the first seven years of a ten-year contract? Steve Crocker, one of the Internet’s founding fathers, wrote a really wonderful piece for the New York Times that describes how the Internet’s open standards were able to evolve over time. As he told me “We had no idea when we started [forty years ago] that this is where we’d end up.” Of course, who among us can predict the future?

Another friend offered a simple test: “If you think this is the final and best version, buy the closed proprietary system. If you think it will continue to evolve over time, go open.”

Open standards invite and encourage participation

From a Steve Crocker email “Open standards become particularly important when they enable new products and services to be built on top of existing ones. Openness is not just about enabling others to build the same products and services and compete directly. It’s also about enabling huge vistas of new inventions that brings the enormous expansion and payoff from new technologies.”

I'll close with Steve's penultimate paragraph from the NYT:
“As we rebuild our economy, I do hope we keep in mind the value of openness, especially in industries that have rarely had it. Whether it’s in health care reform or energy innovation -- [OR smart transportation adds Robin] -- the largest payoffs will come not from what the stimulus package pays for directly, but from the huge vistas we open up for others to explore.”


Some interesting links about open standards not referenced in the above:
In health care and in promoting multimodal transportation.

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Anatomy of Sharing podcast

Here is the podcast interview that went with my talk, the "Anatomy of Sharing," for the Association of College and Research Librarians. Some of this is library/education-specific, but it also covers all the ideas that surround collaborative production, collaborative consumption, and cooperative capitalism that I've blogged about here. How do we identify excess capacity? what do we do with it? what are the opportunities?

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If I were CEO of a Big-Three Car Company

Fast Company, April 2009, published 25 Ways to Jump-Start the Auto Industry. Here is what I sent them, found alongside the other ways.

"Let's assume the bailout solves the immediate cash crisis. Now what? First, I'm going to ask Congress to raise the price of gasoline. I need to be assured that there will be enough demand out there to merit an investment in more fuel-efficient cars. If our gas prices are in line with those of other countries we like to sell cars to (perhaps starting in 2011 when my new cars will be coming off the line), I'll be confident that consumers will embrace these new cars.

Next, I'm going to start experimenting with new product and service models. We recently passed the tipping point of 50% of the world's population living in urban areas. 'One adult, one car' doesn't work in congested and parking-scarce urban environments. Let's expand beyond manufacturing and selling cars to selling transportation as a service.

I'd take 10% of my current R&D budget and put it into a venture fund. I'd finance startups, experimenting in areas where I lack core competency: truly alternative vehicles; services that relate to car maintenance and in-car experience; services that conceive of the car as one node in the larger transportation network; and ideas that leverage my cars and my consumers as a means of collecting data or marketing other in-car services. This is a smart use of my money because I would be investing alongside others instead of financing all the R&D in-house. In the process, I'd gain firsthand insight into a whole realm of business models that might be my future.

Third, I'd definitely stop fiddling with closed, proprietary wireless technology inside my cars and immediately introduce a generic wireless platform into every new car. A standard feature of this platform is the ability for owners to access critical car information remotely. I'd send owners text and email updates telling them about their fuel and battery levels, when it's time to change the oil, and when the car received an unusual bump while parked. This would tie car owners to my company, provide dealers an ongoing revenue stream for maintenance and repair, and give me insight into exactly how consumers use (and abuse) my vehicles. I'd also develop a device that could be easily installed into cars already on the road so I'd have more owners participating.

This wireless platform lets me farm for ideas. As an open system, it would attract the minds, money, and efforts of thousands of innovators to think up desirable applications that a person with a screen in a car might find useful. This platform would be like my PC: Car owners could download any apps they find useful. I'd let the loser applications or those with no revenue model muddle along, and I'd buy up the winners.

By mitigating our investment risk and placing lots of low-cost and low-risk bets, we'd bring the Big Three into the future."

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The Anatomy of Sharing

I just wrote a new talk to be given in full form in Seattle in the middle of March, that I previewed in a 6 minute 40 second version (Pecha Kucha) last week here in Boston (wish that had been taped!). It really held people's attention. This structure does a nice job clarifying where sharing has come from, its current technology-enabled potential, and how and where 2.0 is game changing. Here are the cliff notes (anecdotes, jokes, and facial expressions excluded).

Types of sharing:

Simple sharing (personal): My stuff shared with my immediate trusted friends typically unplanned and so by luck. Think food, books, the spare bed, the car.



Simple sharing (corporate): Company’s stuff, shared with usually anybody who is willing to pay for it. Company distributes its resources across a geography (or it might be virtual). Think hotels (formalized bed sharing), public libraries (books), cars (of course). I was struck by the fact that when looked at in this light, Zipcar wasn’t that innovative. On the other hand, I guess I’ll take credit for the fact that no one had previously thought you could easily (and profitably) share cars. Technology was required for that breakthrough.


Upsides: Pay for only what you use. Distributed locations expand access. No responsibility when not yours. Users might come up with interesting innovations if owner is open to it.

Downsides to this kind of sharing: company has to place the assets in the right place (see poor green guy in bottom left whose need is unmet?) and the assets need to be adequately used to merit their existence (lots of red dots with no takers, unfilled hotels and resorts).

Collaborative and Distributed Sharing (personal): Our (those who choose to participate) stuff shared with just about anyone. Think Flickr, Facebook, GoLoco, couchsurfing (and lots and lots of others).


There are some distinctive aspects of 2.0: Messier and less predictable sharing. Requires much less “stuff” than if everyone had to own their own (this applies to corporate sharing as well). Lower threshold to reap benefits since all the assets are “excess capacity.” This reduced ROI demand has some important implications: the sharing can succeed in more ecosystems, a faster uptake (both supply and demand)is possible since threshold to participation has been lowered. Where there are intangible (non-monetary) benefits to be had, these are likely to be captured, valued, and enjoyed, again because of lower investment to participate.

Can we have the “collaborative and distributed sharing (corporate)”? I believe we can, which is what I was arguing for in my blog on Cooperative Capitalism.

A critical piece to the anatomy of sharing is to think about not only the assets (and where there is excess capacity), and the demand for them, but also about the platform itself, that enables this participation. In the olden days, these transactions were difficult and so sharing didn’t happen. In these new technology-facilitated days, beautiful platforms make for very “greasy” platforms – easy and quick participation.

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Apps for Democracy

Go see Apps for Democracy. It’s what I’m talking about!

1. The DC City government built a platform for engagement. They put up DC's Data Catalog online and invited internal agencies and external free agents – we sometimes call them “people” – to create mashups for $20k in prize money.

2. The city is trying to tap into the excess mental capacity and time of skilled, clever, and innovative people everywhere who want to challenge themselves.

3. Too soon to know what the unintended benefits are, but they are certainly reaping some intended benefits:

• Neighborhood crime
• Historic tour of DC
• Parking garages
• Hospital info

Oh, it has to be incredibly stupid form to put a link in the first few words of a blog. So if you are totally intrigued, now is the time to go check it out again here, a link at the end.

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Time for Cooperative Capitalism

Crisis describes our times. The perilous state of the American and global economies, environments, and personal finances have me convinced that we’ve got to start working and thinking more cooperatively.

Last June I began to give public voice to these ideas and approach that has been taking shape in my mind for a long time -- Ann Arbor (June 11 ppt) and at the Personal Democracy Forum in NY (June 24).

For many years I’ve been attracted to the beautiful efficiency and widespread benefits of shared resources (cars, rides, networks). And over the last few years, I’ve been espousing the need for business and government to think more expansively about the web 2.0 phenomenon – where end users create content and value by building on a common platform (eBay, wikipedia, flickr, Facebook being some famous examples). We need to envision collaborative financing (lending circles), collaborative infrastructure (mesh networks), and collaborative consumption (car-sharing). It is time to push this idea and approach as far as it can go. A way to think about this approach is “cooperative capitalism.”

Here is the formula:
1. Identify excess capacity.
2. Build a platform for others to share/engage with this excess capacity.
3. Appreciate unanticipated benefits

My favorite example at a city level is Bogota’s Ciclovia:

1. The Penalosa brothers (Mayor Enrique and Gil, Head of Parks & Recreation) noted that on Sundays traffic throughout the city was very light.

2. Every Sunday from 9am to 2pm, more than 72 miles of roads are closed to car traffic and open to pedestrians and bicyclists. Tens of thousands of residents get out and use the ‘new trails and paths’ every week. Cost to the city for this highly prized and transforming resource? Just the cost putting up and taking down the barriers.

3. Unanticipated benefits include a healthier population, a stronger community, and increased bicycle use every day of the week.

My favorite opportunity at a city & national level (see my TED talk for a big vision explanation):

1. The wireless devices being used for open road tolling (and in the future for congestion pricing and road pricing) cost about $28, are single purposed, closed, and in active use for about 30 seconds a month. That is a lot of excess wireless capacity!

2. Create an open source mesh (ad hoc peer to peer) communications platform that would turn the device in the cars into nodes (routing and repeating data bits). The software could also be used in all wireless devices (laptops, cellphones, pdas, traffic lights, smart utility meters, etc.), creating a mobile internet (collaborative infrastructure). Each person will have paid for his/her own device (collaborative infrastructure financing).

3. While spending what was required to do the task of open road tolling or congestion pricing and buying in a manner that used an open standard, and an open device, we have now made this investment leverageable for any number of innovative uses, created a robust and resilient nationwide network for local data transmission, and laid the foundation for the next economic engine for the US and world economies. I have a lot to say on this topic, best not here. Email me if you want to see the white paper.

We can glean from the above example some generalization principles that the US government should apply to the relevant procurements: require open standards, open APIs, give preference to responders that leverage existing infrastructure, investments, organizations – in other words – value and encourage cooperation among companies rather than reward closed proprietary systems that shut out such opportunities.

Examples at the corporate level would include Zipcar of course, which enables all the idle capacity of cars to be put to good use through its technology platform that makes sharing cars fast, easy, convenient, and cost-effective. Last year I visited Siemens New York office where the bulk of floor space has been turned over to cubicles that are not owned by any one person, but rather used as needed by its nomadic workforce that shows up in New York only periodically – dramatically reducing the amount of office space needed if each one of its employees had their own office. The unexpected benefits of open platforms abound -- users can innovate, or point the way for innovation (see Innocentive.com for a new way of thinking).

And at an individual and household level, what can we lend and what can we borrow? What can we buy used, and what can we make sure we put back into the marketplace? Think of eBay as collaborative consumption.

This way of thinking isn’t bad for the economy. Remember that our starting point is that everyone is going to spend as much as they have to spend. We – families, companies, governments -- all have so much we want to accomplish with such limited financial resources that the most logical, rational, profitable, and self-interested thing to do is to spend it as efficiently as we can: maximizing the benefit of each dollar spent, while minimizing the resource consumption. Since we know we are going to spend every cent, let’s get the most possible value out of that spending.

Think of our times. Cooperative capitalism is not just an interesting approach, it is an imperative.

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Blog posts are supposed to be short and to the point – that is satisfied by the above. For a little more background on why the current financial crises leads me to move from thinking that these are just interesting ideas, to a much stronger concept of “imperative,” read on.

We are living in a world of very precarious revenue sources at all levels of the economy – household, corporate, and governmental. Americans are at their lowest savings rate since the 1930s. In August, the GAO estimated the 2008 Federal deficit to be $410b, 3% of the GDP. The addition of the $700 billion bailout has the potential to double this to 6%. On October 1, our national debt passed $10 trillion dollars (that’s a 1 followed by an unlucky 13 zeroes).

And yet, despite our incredibly tight – and shrinking – budgets, we face spending imperatives of unparalleled proportions. In the US, the explosive highway and infrastructure building of the 1940s-1970s, are now meeting the end of their 30-50 year anticipated life spans. We have much rebuilding to do, just to stay even, and we have much new building needed to accommodate our growing population and 21st century transportation and communication needs.

We have an energy and climate crisis, that demand we rethink, retool, and build anew our power plants, our factories, our office, our stores, our homes, and our travel patterns. We have a broken healthcare system that without a fix will swallow the budgets of business and government, and then, despite those expenditures, leave many uninsured.

And of course, we Americans live in a world of 6.3 billion people, rising rapidly to 9 billion. And we all know this world cannot sustain the current use patterns many ‘enjoy’ if applied to everyone.

A friend of mine, Juan Enriquez, just gave his 20 minute analysis and prescription last week at PopTech, on the need for the next administration to start a program of austerity. He gives a compelling argument and has some nice visuals. And last week, Bruce Nussbaum blogged for Businessweek an opinion piece called “Zipcar Capitalism, a new economic model?,” an approach the author says he will bring with him to the World Economic Forum this week in Dubai. Both of these argument are running down the same path I am.

Read more!

Openness is Environmental; who’d a thunk it?

So here is the gist of the argument:

Open architecture, open standards, open protocols, and open networks enable the multi-purposing of devices, and encourage and facilitate organic improvement in device and application functionality requires. E-waste is reduced when devices serve multiple purposes, and when useful life can be extended through on-going adaptation and upgrades with software or addition of hardware components.

Closed proprietary systems, on the other hand, do the exact opposite. They are made for discrete purposes, with planned obsolescence, and innovation is limited to insider willingness and insider imagination.

To see some exquisite artistic renderings of consumption, including electronic consumption, check out Chris Jordan's work, from which the photo above is an unworthy clip. There is an important tool -- an Executive Order -- the US government can use, that would have an enormous impact on reducing electronic waste.

According to an EPA study of solid waste: "The production of electric and electronic devices is a very resource-intensive activity. The environmental burden due to the production of electrical and electronic products ("ecological baggage") exceeds by far the one due to the production of other household materials. When these devices become obsolete and are discarded without recycling they leave behind lead, cadmium, mercury and other hazardous wastes.

In USA In 2005, we generated 2.6 million tons of e-waste in the US, or 1.4% of total discards. Of this amount, only 12.5% of the consumer electronic products in the municipal waste stream were "recovered," This compares to the overall recovery rate of all categories of municipal waste was 32.1% in 2005.” (1)

Even while "68 percent of consumers stockpile used or unwanted computer equipment in their homes." E-waste shows a higher growth rate than any other category of municipal waste in the EPA's report.

Of course, I have to tie this in to my favorite subject: transportation! Long-term policy goals for the US department of transportation include IT for safety, mobility, and convenience applications. These applications will rely on electronic hardware for wireless communications connecting the 240 million vehicles on the road today with network access points across America.

Given the scale and scope of the US transportation system, pervasive throughout America, touching every American family, electronic devices that leverage open architectures, open standards, open protocols, and open networks -- enabling the multipurposing of electronic and wireless investments – can dramatically reduce the amount of e-waste and would be the environmentally preferred solution for safety, mobility, and convenience applications that are intended for large fleets (over five thousand units).

The Presidential Executive Order -- “Strengthening Federal Environmental, Energy, and Transportation Management,” signed by President Bush on January 24, 2007, instructs Federal agencies to “conduct their environmental, transportation, and energy-related activities under the law in support of their respective missions in an environmentally, economically and fiscally sound, integrated, continuously improving, efficient, and sustainable manner.”

Encouraging open architecture, open standards, open protocols, and open networks is important for this country’s future, one that includes limited resources – elemental as well as monetary ones. We need to get the most out of every device, every investment, and every dollar. Openness helps us accomplish that.

Read more!