From the perspective of a marketplace, the target market is a point of reference for participants in any financial transaction. This distinction is a necessary methodology that allows the marketplaces to facilitate open commerce. The only purpose of all marketplaces is to improve the target market where we choose to do our work.
At times, this task is difficult. Divided by collusion, commerce is fragile and fragmented into the sand, aggregate, and water. That same coarse commerce, stubbornly, turns into solid bedrock with an introduction of a powerful binding agent — an Open Marketplace.
To efficiently yield a market into a functioning marketplace requires an absolute form of efficiency because, typically, marketplaces are (and maybe even must be) scaled.
In scale, all elements: the sand, the aggregate, the water, and the binding agent become resource-heavy engineering endeavors. As all engineering marvels, the supply and demand in this mix are centric and, sometimes, iconic due to the scale of operations that we are can achieve. Each element is essential, and a marketplace must not take short-cuts to by-pass the required factors of safety for both participants: suppliers and consumers. Marketplaces must obey the antitrust law, that same way a Hoover Dam must accept the law of Nature. Marketplaces cannot argue with the free market on how it should operate, and instead, we must ask.
With an introduction of network effects, marketplaces can cure highly efficient economic processes that sometimes redefine our entire way of life. We can create entirely new industries and save massive financial resources from decay. To produce the required network effects for impact, marketplaces must be efficient as well as highly-binding. Once both conditions are present, our users receive an end-to-end user experience. End-to-end UX is defined as follows: An Ability to Produce Systematically Positive Outcomes for All Users.
There is a time, a place, and a reason for marketplaces to be developed. The same product that was successfully delivered in 1936, seems unreasonable to reproduce in 2021. Of course, that does not mean that the technology or innovation developed hundreds of years ago is somehow dead today.
Excellent technology is difficult to destroy, the same way it is difficult to delete the benefits offered by the presence of excellent information. People systematically ask for the best of the best what is available to us in our best interests. We grow accustomed to good ideas because good ideas bring us much utility. We ask for the utility to be protected. We pay for the utility to function.
At some point, marketplaces become the gatekeepers. These gatekeepers are not necessarily “bad.” A well-built gatekeeper is a required element of a well-managed system. The question is who manages it, how is it managed, and why? If we were to propose for a minute the idea of developing a Hoover Dam with private equity, what would that look like? I suppose, at some point, such a task is futile. In that sense, something other than money guides these products. The impact of clean electric energy and clean water in our daily lives far outweighs any short-sighted financial returns. We made this choice as a society that some products are better managed as public utilities.
The Internet makes massive returns possible with the influence of clean data and aggregate information. The Big Five is a living and breathing proof of how excellent information and an efficient delivery mechanism can create massive returns to investors. E-commerce marketplaces are systematically profitable because we can deliver network effects efficiently.
Once the network effects of open e-commerce are archived in any given target market, the Black Canyon turns itself into the new riverbed — the unstoppable force of information disrupts what is otherwise dead landscape into a flood zone of newly available and highly valuable resources.
The next generation of e-commerce is Open Marketplaces. There is no mistake about it. In 2018, the Big Tech antitrust was merely a notion, and the process of litigation was ultra-slow under the Trump administration. Antitrust enforcement is a procedural process and it takes time, but these federal agencies were also severely underfunded. This was a mistake, like every other decision made by President Trump. This does not mean that Open Marketplaces are delayed in any way to achieve our ultimate form of success — to develop a legal monopoly in any given target market.
As of today, post-election November of 2020, the FTC/DOJ has yet to even file charges against Amazon to challenge the Amazon Flex gig model and Amazon Marketplace price parity clauses. Dozens of gig economy marketplaces still operate in violation of federal laws.
It is my prediction that once Amazon goes down on these two issues, so will the “dynamic pricing” in the gig economy, price-parity in online travel agencies (OTA) industries, and blanket referral agreements in my target market — the residential real estate brokerage industry.
Price fixing in the gig economy cannot survive because it is cancer upon itself, and “dynamic” pricing set by a third-party taking a rake does not comply with free-market forces of supply and demand. The purpose of price-fixing is to coordinate pricing for mutual benefit. Price fixing is an antitrust offense that is considered “per se” unreasonable restraints of trade that lacks any redeeming competitive purpose — it is unlawful without any further analysis of any economic justification. The Internet is here to facilitate free commerce.
I find that Open Marketplaces are not self-evident at first. It takes a vision and risk to build such products. The reward to consumers is an efficient Internet that helps facilitate the free flow of commerce, efficiently.
Open e-commerce is difficult to build, but those of us who choose to do so, we build it for a reason: we want to improve the financial lives of consumers. The antidote of the government takeover of Big Tech is an entrepreneurial ability to offer new Big solutions that bring unmistakable benefits to consumers. Once the government begins to take away the Big incentive to build a legal monopoly, the innovation will stop.
As founders, there is no reason to fight with our government, as long as the Democratic government specifically employs antitrust enforcement and straight-forward regulations. At the same time, the government must allow successful monopolies, or it will end up in a cesspool governed by self-serving collusion. It is that much cheaper than an open pool of fresh water.
All Big Tech enterprises are required to obey the antitrust law so that someone else can build a new one. This is a required element for innovation that spurs competition and added utility returns directly to consumers. To deliver the network effects as a means to promote competition, not merely as a means to achieve a successful exit IPO, is to deliver open e-commerce.
Marketplaces sold to the public cannot engage in price-fixing or “dynamic” pricing schemes because such practices all eventually fail, and they must fail. In another word, marketplaces sold to the public must solve a Big problem without causing any new problems in the process. This is the only true definition of a successful e-commerce startup.
Open e-commerce is a product of consumer trust that operates as a responsible and law-abiding gatekeeper, a counter-element to price-fixing, consumer allocation, tying, and all other forms of collusion.