The most valuable part of having a large social network (for me at least) isn’t visibility, it’s about reducing middlemen.

The Internet has destroyed many middlemen, and created countless new ones. I barely use the former, and when I don’t have to I avoid the latter.

Examples

  • Classifieds --> Craigslist and eBay
  • Travel Agents --> Kayak and Hotel Tonight
  • Tower records and Sam Goody --> iTunes, Spotify, and TurnTable

Let me share three short anecdotes

Story #1: I had an extra Apple TV I wanted to sell. I could have gone on eBay and found the highest bidder, but there are two critical downsides to that route. A) I have to pay eBay a fee for the transaction. B) I’m competing against hundreds of other people selling the same product as me. I ended up posting my wares on Facebook and sold the device to a trusted friend within 20 minutes. PayPal and UPS take care of the rest. I also help get the product in the hands of someone I know.

Story #2: Because I'm bootstrapping my startup CentUp, I decided it would make sense to lend out my time on the side to earn some extra income. My first thought was to join a network like Clarity which lets you create a turn-key destination for people to hire you. But much like the eBay example above, I decided I didn’t want to pay someone a fee to provide me with something I could accomplish on my own. So in about 30 minutes with the help of a Stripe-powered Squarespace site I built my own website where people can buy my expertise an hour at a time. Instead of paying 15% for every call I get through a marketplace, I pay a small monthly fee to my site provider. Heck, it got so popular, I added two more people to supplement my efforts.

Story #3: Before I met my lovely fiance, I wasted plenty of time and money on paid dating sites. It never led to more than two dates, which again led to more wasted time and money since my end-goal was finding a long-term partner. Having a large twitter network however has led to me having a large circle of friends in Chicago. Literally some of my best friends I originally met through a conversation that started on Twitter. Through that circle of friends, I met Katie. Katie and I are getting married this year. My network trumped any middleman’s technology or marketplace.

On the Internet, you can be your own middleman.

In the “old days” middlemen thrived on scarcity and existed because it was too difficult for consumers to get access to each other or certain things.

Today middlemen thrive on laziness, lack of time, or technological ignorance. So many are a luxury versus a necessity. And that’s ok. It’s just important to realize that the barrier of entry for companies to become middlemen have become lower for the very same reason it’s easier for you to get by without them.

And because of the above, I think that the massive success of many new kinds of middlemen, will also lead to their ultimate demise if they don’t rapidly change their service offering every few years. Today middlemen are springing up to eliminate waste and lower market prices, but they’re also changing consumer behavior and in many ways teaching consumers how to get the same products on their own.

Economies of scale will always make middlemen a necessity. Technology will simply continue to make their lifespans shorter and shorter every year.


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