Nathan Shedroff
Jan 31 · 8 min read

The greatest threat to business, is business, itself — specifically a handful of companies that can control access to nearly all customers.

In most of the pre-Web days (B.W.), some companies controlled their own business and brands — certainly in the B2B space and the B2C companies which had the most valuable brands. The rest had to deal with mediated relationships to their customers. Unless a business could afford their own stores or “brand temples,” they had to play by the rules of grocery stores, department stores, and ultimately big-box stores who controlled access to their customers. These “platforms” set prices (or heavily influenced them), controlled placement (and, therefore, experience), and owned all data resulting from transactions. All companies who didn’t speak directly to their customers, through showrooms, dealerships, their own stores, or direct sales, were at the mercy of these platform owners. You know them: Sears, Macy’s, Safeway, Whole Foods, Target, Walmart, NBC, and the like. They ran valuable businesses because they owned the customer relationship and, therefore, the best value that could be derived from those relationships.

Just ask Bosch, P&G, J&J, and hundreds of other companies whose brands and customer relationships — not to mention profit margins — suffered at the hands of Walmart, Costco, and now Amazon.

Even advertising was mediated. Unless you had a piece of property on which you could erect your own billboard, reaching customers through advertising was mediated by others’ channels, platforms, and networks. These set the prices and even exercised editorial descretion over messaging.

After the World Wide Web (A.W.), that all changed. “Disintermediation” began as companies renegotiated contracts, created and managed their own websites, and built direct relationships with their customers. Nearly EVERY company since has created their own presence that allows customers to connect directly. And, any company could afford to do this because the technologies to create and manage websites was incredible affordable — the foundations of which were all open-source. The Web exists because the TCP/IP protocol created a unified backend and HTML created an open, unified frontend.

Whether or not the Web broke monopolies or access, or how many, is irrelevant. The Web enabled every company to potentially own their own relationships with customers.

All that matters is the relationship to customers.

Without a direct connection to customers, all organizations (including non-profit foundations and even governments) are at the mercy of those who control access and can’t realize the best value from their relationships.

Being an OEM (Original Equipment Manufacturer) isn’t terrible. For some, it’s a good business. But, the profit margins, influence, and autonomy pale in comparison to who gets to put their name on the product or service and who talks to customers directly. You can’t be a premium brand, in fact, without this access.

Customers aren’t always easy to deal with — some are demanding and even ignorant. But, the Web ushered-in a new kind of business — one that was lucrative for those who satisfied customers the most.

All of this is about the change.

The Web uses a Graphic User Interface and this is a major factor why it was so successful in reaching so many people who were new to computers, the Internet, and mobile devices. The visual paradigm of a GUI is easier for non-techies to do nearly everything. Being able to see options, choose them directly, and understand what was happening created untold opportunities to reach non-engineers (read: “the rest of us,” as Apple famously promoted).

Today, we’re on the verge of a new paradigm for using digital services: the conversation. OK, conversations are nothing new. In fact, they’ve been a part of human interaction for as long as we’ve been human — maybe longer, even. But, sophisticated conversations are very new to technology. The Conversational User Interface (CUI) is going to do for customers and opportunities what the Web did just over 20 years ago — only it’s going to be even bigger. Think about how many people in your lives still have issues using the Web (OK, that’s mostly your parents, grandparents, and the very youngest children). Now, think about how many of them are capable of communicating via conversations. Now, consider how often a conversation might be easier, faster, and more satisfying than typing and taping into screens.

Forget the privacy issues of using Amazon’s Alexa, for the moment (though they are dire). It’s one of the most popular CUIs in the world and people have installed them into their homes to play music, answer questions, control their lights, and even shop. There is nothing wrong with this but it represents the end of the world for any business that isn’t Amazon (or one of the other few CUI vendors).

Unlike the Web, there are no easy-to-use platforms for sophisticated CUIs and they’re much more difficult to build well than an HTML-based website. There are no Machine Learning (ML, sometimes wrongly called “AI”) standards on the backend and the data stores necessary to train voicebots like Alexa are considerable and costly. While simple chatbots can use one of a few chat “standards” to communicate in text, anything more complex than this requires formats yet to be standardized — and none are open.

This leaves only one option for most companies who want to interact with their customers via conversation (and, soon, all will need to): buy one from that small cadre of companies who can offer and build them for you: Alphabet (Google), Amazon, Facebook, Apple, Microsoft, and, in Asia, Baidu, Alibaba, Tencent, and maybe Samsung (lets refer to them by FAAATMBAS—yes, that’s Faaat MBAs). If you’re a tech powerhouse already, you may afford to create your own, like Autodesk did with their AVA assistant. But, the rest of us aren’t in a position to do that.

Every other company in the world is going to have to buy their CUI services through one of the few companies mentioned above — and run their customers and data through them. Think of where the Web would have grown if, back in the mid-90s, the only way to build a website was to hire Cisco, Microsoft, IBMN, Bull, Olivetti, Softbank, or Computer Associates. Hint: it would be nowhere.

This is already happening.

Like Climate Change, the shift to Massive Reintermediation is already happening—just slowly enough that most businesses and politicans don’t yet notice it. And, it’s going to be nearly as destructive and disruptive.

People can buy any number of devices for music, home automation, appliances, and whole cars, and then choose Amazon’ Alexa, Google’s OK Google, Apple’s Siri, or a few others (in certain markets) to control them. Customers love the ease (and rightly so). But companies are only now seeing where this future delivers them. If you’re Bang & Olufsen, the singular sculptural home theater device producer, when your customers ask Alexa or OK Google to do things like play an album or lower the volume, who now owns the customer relationship?

If you’re one of the many car companies who now allow Siri, Alexa, or OK Google to own the car interface for their customers, what value is left for you? Sure, these are optional interfaces — for now — but they won’t be very soon. They’ll be a standard feature customers look for — one that most car manufacturers can’t deliver on their own.

Short of walking into a their own branded store, nearly every company in the world will be at the mercy of FAAATMBAS. And, increasingly, people aren’t going to want to talk to each CUI individually when they can go to one that can handle all of their transactions through one interface. Think about having your personal assistant make the calls, find the best deals, schedule your appointments, and manage your calendar. That’s a lot easier than dealing with a plethora of separate services with slightly different capabilities and idiosyncrasies.

Not only will these CUI providers control the customer relationship but they will have the primary access to customer data, transactions, emotions, and be able to correlate and process insights on these without the need to share them with the companies that actually provide the products and services (or the customers who generate the data to begin with). The data will be more valuable than the actual services.

So, the world we find ourselves on the verge of is one where a few companies, the FAAATMBAS, control nearly all of the customers relationships, either because they’re the only ones capable of it or the ones who make these most convenient.

All of your customer relationships will belong to others.

That’s a recipe for disaster if you want to be a premium brand, have a direct relationship with your customer (and receive the best value, as a result), or have any control over your own future. Ceding control over your customers begins a long, slow slide to becoming just another OEM to Amazon/Google/Facebook/Tencent/etc. If you think that bias is an issue now, just wait until there’s only a few players left in the space.

Amazon is already doing this on the Web. It’s just a matter of a short time before it does this via Alexa.

And if you want to innovate and be an entrepreneur, unless your plan is to just build and sell to one of the FAAATMBAS, you’re going to be out of luck. Every entrepreneur and investor in the world should be up-in-arms about this. So should every politician, planner, and economist who wants high-value jobs and a viable tax base in their communities. The great sucking sound of money being drained from local communities that has occurred via multinational corporations is going to pale in comparison to just a handful owning every customer in the world. Silicon Valley already speaks for nearly 50% of those customers. Chinese companies account for nearly the other 50%. That doesn’t leave much left for Omaha, Kansas City, or Tampa, let alone Tokyo, Barcelona, or London.

Every city in the world is about to become home to a maquiadoro economy—if they’re lucky. That’s the best they can hope for if we don’t change the playing field (and fast).

I realize that this sounds inflammatory and alarmist. It is. I’m sounding the alarm. So, you can’t pretend you weren't warned once you’re fortunes turn. You‘re welcome to bury your head in the sand or become a Reintermediation Denialist. I’d love to be proven wrong (so, let’s talk about this). I’m happy to talk about the tech, the economics, the business, the politics, and the social aspects.

There is another way.

Of course, I’m not just sounding the alarm, I and others are working on a fix. We’re building an independent, open-source alternative to the FAAATMBAS. It’s called SEED because it’s foundational to growth (and everything else). I’m happy to talk about this, too. I’m happier still to haver developers and funders join us.

You have been warned

After Climate Change and Democracy, this should be the most pressing issue facing business globally (you can draw your own conclusions as to how much that impacts the larger society). In the USA and Europe, it probably ties with preserving democracy in the wake of Russian interference via—you got it, Twitter, Facebook, Goolge, and other tech platforms (that’s not a coincidence, that’s existing foreshadowing).

You can no longer say you haven’t been warned.

Nathan Shedroff

Written by

Nathan is a serial entrepreneur, including the new SEED digital currency: www.nathan.com & www.seedtoken.io

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