Platform Design Toolkit, an open source toolkit and community that helps organizations to build platforms that mobilize ecosystems for an age of innovation, complexity, and interdependence, runs the Boundaryless Conversations Podcast.
In this episode, hosts Simone Cicero and Stina Heikkilä interview NFX Managing Partner James Currier.
A link to the podcast can be found here.
Here are my thoughts.
On the power of networks
The conversation started around the power of networks to supplant hierarchical structures and institutions as digital and connected technologies make data and insights more accessible and transparent. As an investor in platform businesses, James’ focus is on enabling entrepreneurs to lead a transition from hierarchical industries to platform ecosystems through the process of creative destruction. His belief is that platform ecosystems will emerge around charismatic leaders motivated to challenge the status quo.
“And as the technology seeks to create networks, the hierarchies that exist today that are intended to protect people, whether it’s governments or educational institutions or churches, the hierarchical institutions are going to essentially fight back against the open field network availability of all the data. And that interplay will be an ongoing battle between the two forces.”
“…you will see these new forms emerge around individuals, as long as those individuals also then build the platform to have network effects so that the system has staying power.”
This mindset is characteristic of the orange/prosperity vmeme that rebels against existing institutions (blue vmeme) that have become complacent, inefficient and corrupt. It is the mindset that underpins the current capitalistic system that has propelled our society forward. I wrote about the importance that this mindset and the capitalistic system are playing in creating the platform ecosystem infrastructure that will eventually underpin a more cooperative world in this post on hyper-productivity. In short, it is our desire for convenience and the drive to create individual hyper-productivity that will most likely propel the emergence of platform ecosystem models. And it is the realization that individual convenience cannot solve collective problems that will likely compel us to evolve our new platform ecosystem infrastructure to more cooperative approaches that enable everyone to thrive. 
I modeled this transition in my Ecosystem of You infographic (see also presentation on EoY) where I envisioned ecosystems ultimately being structured around a hierarchical set of human needs. The EoY infographic depicts the tension between decentralized networks and centralized networks but I realize now that it does not highlight the tension that underpins the shift to hyperproductivity – the battle between centralized hierarchies and centralized networks that James is fighting.
On the speed of change
This part of the conversation was a tribute to the beauty of the orange/prosperity mindset with its driven and competitive spirit of individual entrepreneurism. The conversation touched on the importance of having a mindset and culture that promotes the speed of innovation, a willingness to fail and creating things that are 10X better.
“What we should do instead is build systems that allow for rapid iteration and experimentation that allow for rapid starts and ends without friction.”
“…the speed with which you can try a new idea and have it die is much faster in the US and it’s even faster in China and I think long term, the systems that will work better are the ones that allow for this rapid iteration because we don’t know where all these things are coming from”
This motivation to innovate with speed is a critical ingredient to enable platform ecosystems to proliferate. Combined with an awareness that platform innovation can create models that further concentrate power and exacerbate inequality, our ability to rapidly address societal challenges collectively via platforms is very powerful.
On the impact of platforms on all industries
The conversation shifted to a discussion on the future of marketplaces and whether dominant platform players (GAFA – Google, Amazon, Facebook, Apple) will continue to grow or whether new vertical niche and/or horizontal marketplaces will emerge to challenge them.
James felt that the GAFA players would continue to grow and that new specialized vertical/horizontal marketplaces will emerge to address the niche aspects of markets that large platforms can’t address. James also felt that platforms create better, more efficient access to data and they make really transparent which individuals or providers are performing best. This has a tendency to accelerate inequality as data transparency shifts opportunities to the minority of best performers and leaves the majority of the rest behind. This level of transparency also creates fear in the majority and has led to the rise of authoritarian or populist leaders.
“…in many markets, the transparency of data is going to drive a steeper power law so that the winners win more and the people who are behind get further behind.”
The conversation shifted toward the potential in alternative, more participatory platform cooperatives. James felt there was potential but that someone would have to succeed and then drag the whole system with it. Simone asked where James saw market networks and platforms moving and he indicated he was investing heavily in human capital networks. Labor marketplaces like UpWork, placement marketplaces like hire.com and networks for professionals such as lawyers, architects or designers.
I found this interesting because I think the human capital space is a logical space for platform cooperatives, but there is currently a lack of a scalable architecture that makes it simple to structure work for cooperative action, attract and incent participation, reward people for their contributions and easily share and hold assets in common. Commons based peer production, open value networks and systems like open value accounting are promising, but they currently lack the scalability. I see an architecture like Web 3.0 providing the infrastructure cooperatives need and also providing a means for the commons and cooperatives to interact with centralized platform providers. I envision this kind of like an hourglass, with the commons and peer to peer sharing networks on top becoming the primary means by which people interact and centralized infrastructure providers and market utilities that require vast amounts of capital on the bottom.
On the risks of platform models
Simone asked if James foresaw major risk resulting from the emerging platform economy and I found James’ response fascinating. At first, he said he preferred to focus on opportunities rather than risks, but then he articulated perhaps the biggest risk of the platforms – their ability to concentrate power and wealth with the platform owners at the expense of the ecosystem’s participants.
“So I think we’re going to have challenges with these network effect businesses drawing all of the value into the centre and leaving the edges of the network, the edges, the nodes on the edge of the network with very little, just because of the math. And that’s why those are the types of businesses we invest in. I mean, we’re trying to make good investments. And that means that we want our businesses to become very valuable. And to become very valuable, you want to build a network effect and draw a lot of value into the centre.”
What I found most fascinating was listening to him contemplate his own role in this dynamic as a platform investor. On the one hand, he was aware of the risk that platforms present to exacerbate inequality by “sucking all of the value into the center” of a network and yet he admitted that that was precisely what he does for a living. In Spiral Dynamics, this kind of awareness of the implications or externalities of one’s actions is what can cause a gnawing inner conflict that triggers a shift in mindset.
Perhaps, James may invest in platform cooperatives in the future. 🙂