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Commoditization of trust

See:

The commoditization of trust is far more powerful than you might think.

The examples of Uber and Airbnb are especially important: vacant rooms and taxi cabs have not been digitized, but they have been disrupted.

Network, commditization, positioning

The companies and other market-makers that are transforming industry-after-industry have three characteristics that work in concert to create value:

  • An infinitely scalable network

  • Commoditization of a previous constraint

  • Positioning to be the chief beneficiary of industry transformation

The commiditizations:

  • Airbnb commoditized trust, integrating trust into a worldwide network of hosts and guests, and breaking up trust from the underlying physical property.

  • Uber commoditized trust, and also commoditized dispatch, integrating trust into a worldwide network of modularized cars and drivers.

Positioning closer to the customer

These companies commoditized trust, and positioned to transform their industries. The companies are modularizing the production/delivery of their service, and this enables them to move closer to the customer.

  • The implication of building a platform of trust is not that a startup's solution is now more trustworthy than an incumbent; rather, it’s that the trust advantage of the incumbent has been neutralized, enabling startup solutions to compete on new vectors.

  • A world of commodified trust has significantly less need for much of the infrastructure of modern society, including inefficient sectors like hotels and taxis, whose primary differentiator is trust, along with the regulatory state dedicated to enforcing that trust.

  • More broadly, breaking up a formerly integrated system — commoditizing and modularizing it — destroys incumbent value while simultaneously allowing a new entrant to integrate a different part of the value chain and thus capture new value.

All of these considerations apply to many of the other sharing economy startups: what makes them work is not simply mobile access to the Internet, location data, and all the rest; equally important is the systematization, and by extension commodification, of trust.