During its history, mankind spent the vast majority of its time more or less in the same way: from the appearance of the first homo sapiens, around 200 000 years ago, to the Middle Ages, you would still see groups of people living in fortified villages, hunting, fishing and farming with their own bare hands, at the mercy of weather, occasionally meeting at the marketplace to trade their goods. Not to mention transportation: as a matter of fact, the horse has been the most efficient means of getting from point A to point B until the second half of the 19th century, when trains were invented. Then, suddenly, as if from some kind of collective frenzy, mankind started developing new technologies, one after another, in an astonishing race all over the last 500 years, up to the present day. There has been cumulatively more technological progress in the last 300 years alone than in all of the Bronze Age, Iron Age, Classical Age and Middle Age together, and the advances do not seem to be slowing down anytime soon. Nowadays, we enjoy services and commodities our ancestors could barely fathom, and the business of trade itself has evolved to fit what has been defined by the World Economic Forum as the “fourth industrial revolution”.
If the first industrial revolution was triggered by Watt’s invention of the steam engine, the second one by Smith’s model for the division of labor and the third one by the invention of computers, the fourth industrial revolution owes its existence to the Internet, our world wide web whose potential is still unknown. The rise of a global network gave birth to a virtual arena where consumers and businesses can communicate even before hitting the marketplace, and in such a scenario filled with opportunities and risks alike, it wouldn’t take long for a brand new idea of business to be born: businesses which do not own assets, but data.
The most outstanding example of this new approach is Facebook itself. As a social network, it does not create or sell any product: it just applies complex algorithms to put profiles in contact (the famous ‘people you might know’ section, as well as the pages that occasionally appear on your wall), and profits from advertisement. And yet, Facebook’s market capitalization is 267 billion dollars as of 2016, making Mark Zuckerberg’s firm the leader in the social networking sector. But the innovations brought by the Internet are not limited to contacts between people, and the most adventurous entrepreneurs have already taken advantage of it in other departments.
It is the case of Uber, a San Francisco-based enterprise developed as a smartphone app designed to put people in search of a ride in contact with willing drivers, for a predetermined fare. Apparently a simple idea, Uber is gradually replacing taxis in their role of “chauffeurs for hire” all over the world and is now estimated to be worth around 62.5 billion dollars, more than Hertz and General Motors. However, this is not to the liking of taxi drivers themselves, who have more than once actually sued the company or organized strikes against their allegedly unfair competition, with alternate success. In the short stay business, AirBnB is the most widely used platform for temporary accommodation, connecting landlords and tenants searching for a room to spend a night or two in more than 190 countries around the globe. It doesn’t own a single hotel, and yet it is valued 8 billions dollars more than the Hilton group, that owns 4500 more or less luxurious residences. Finally, I would also like to draw your attention to Amazon, one of the most popular online marketplaces ever. Born as an online book store in 1995, in only two years it became listed on the stock exchange, and by the new millennium it had enriched its catalogue with all sorts of goods: from clothing to electronics, from cosmetics to food. There is little you cannot find on Amazon, and it also tends to come pretty cheap, if you search well. Many argue that the recent downfall of Walmart, which had to close 269 stores by the start of the new year, is due to the merciless competition by Amazon. Unable to keep up with its competitor’s prices and delivery service, Walmart is planning to also focus on e-commerce in the foreseeable future.
So what is the secret behind the success of this new line of business?
We are facing a real logic of “non-possession”: new firms do not focus on the physical, material aspect of their organization, but rather on their interaction with customers, specializing in intuitive interfaces and clever algorithms that allow users to find exactly what they’re looking for, at any time, anywhere in the world. It is a wise strategy, if you think of it: after all, the asset part of the company is usually the most expensive to set up, while the customer relations sector is considered the most profitable. By emancipating themselves from the former and embracing the latter, these companies have potential for immediate and impressive profit without actually providing any good themselves: their trade is to put you and the service provider you are looking for in contact!
If we are really entering a new stage in the evolution of mankind, then we have to be ready for all sorts of wonders: soon cooking, cleaning, gardening and even looking after children might be a thing of the past. As this free market of “thin air” grows and develops, it really is only a matter of time, before somebody comes up with an app or a website for each and every one of these daily needs. But the real question is: will you take the challenge?