Saving the world with IaaS — Infrastructure-as-a-Service
These concepts below come from Jeremy Rifkin and his book “Zero Marginal Cost Society”.
Buy his book or look up his name on youtube. He introduces how approaching zero marginal cost in the real world will bring about new economic models that incentivize sustainability and access.
40 years from now, people don’t buy cars anymore.
Ignoring maintenance and fueling costs, why pay several bitcoin for a vehicle that sits unused for 95% of the time you own it. Plus you’re mobile and not in the same place long enough where buying a car would make sense. Instead, you use your phone to hail a self-driving car that delivers you from point a-b, which works everywhere across the globe. You pay only for the marginal cost of each ride: fuel + maintenance + fee to car manufacturer for future developments.
Having a fancy car is no longer the symbol of power and influence, now it’s your Instagram feed with pictures of all your exotic and interesting experiences and achievements. (Note, this is not saying one is necessarily better than the other)
Open Source the Physical World
The communication revolution unlocked by the internet has new generations growing up without thinking about borders when they communicate. Without a cost to share, it’s unveiled a powerful human intrinsic motivation to collaborate. This motivation rivals traditional proprietary models that depend on profit motivations. Need proof? Google, Amazon, Facebook, and McDonalds all use linux servers to run the popular services you rely on everyday [link], not Microsoft or Mac.
Yet, this Open Source collaborative culture has largely been restricted to the web. Software has zero marginal cost, it can be distributed virally for free once created.
Not the case for objects in the physical world, which have material and distribution costs. Yet with the introduction of new technologies, namely IoT, 3D Printing, and public blockchains — there’s a path to bring this digital open source collaborative phenomenon into the physical world. Through what Rifkin calls, the Collaborative Common.
What happens when the physical world has the tools to share abundance efficiently and approach zero-marginal-cost?
Access Economy (not Ownership)
Wealth for young people today is defined by access, not ownership. The companies that spurred these ideas, Uber, Airbnb and other sharing economy companies are onto something.
We’re already living in a post-scarcity world. The problem is distribution and access.
In other words, getting value out of unused physical assets by sharing it, whether that’s an empty seat in your car or apartment while on vacation. It’s unlocking current abundance to fill demand.
Yet the current sharing economies are rudimentary in that they are achieved through rather traditional middleman, with hefty 20% services fee to fund them. They also have unnatural incentive to grab monopoly on the concepts of ride- and accommodating-sharing itself, like google is now a defacto verb meaning to search something online. Uber itself is incredibly aggressive at raising massive war-chests from varied investors to rapidly build out its network through subsidizing ride costs, burning $2 billion in the first half of 2015. And what natural pressures exist to keep these fees from rising if a monopoly is reached?
Eliminating the middleman layer (uber & airbnb) from these taxi and accommodation services would unleash entirely new lifestyles and economic models. If current sharing economy middlemen can provide cost competitive options by unlocking abundance at ridiculous markups, what happens when you recreate these sharing economies into a public infrastructure, from which service providers directly provide access.
Infrastructure as a Service
Back in 2015, KLM Airport in the Netherlands said no-more to buying light bulbs. Instead, they paid Philips to provide light “as a service”. KLM basically told Philips — look, we want light for the next few years, take care of it. [link]
All of a sudden, the economic incentive for Philips changed.
Philips kept ownership of all the lighting equipment and would be able to repurpose it after the duration contract. Instead of profiting off of the quantity of lightbulbs sold, they made money the less they needed to produce. This caused Philips to make more efficient lightbulbs that lasted longer and could be repaired and used again.
This model of “infrastructure as a service” creates the economic incentive to create longer-lasting, recyclable, sustainable products.
Let’s extend this thought experiment further.
Let’s say that instead of ordering your ride through Uber, it was through AutoNet — a decentralized network that pairs autonomous-cars with riders at the lowest possible transactional margin. The autos on the road would be produced by car manufacturers who act as service providers to this network. Because it’s a collaborative common, there’s no middleman and both the service provider and rider share that previous slice of the pie.
The common would rent Autos-as-a-Service for a specific time period. Since car manufacturers keep ownership of the car throughout the lifespan, they become incentivized to make their fleet live longer through cheap repairs and upgrades. These car manufacturers would also benefit from the dramatically reduced distribution costs of getting out their vehicles with no middlemen. Instead of dealing with a range of dealership networks, it simply installs the open source AutoNet, turns it on, and the car drives out the door to collect fares.
And this phenomenon extends beyond cars.
In fact if you think about most physical goods you own, for most of the time they go unused. Your relationship to those items changes when you can access them at the touch of a button.
We’ll look back and wonder that there ever was a time where everyone owned their own hammer.
— Astro Teller, Google X
(Avoiding a tragedy) Who pays for the commons?
The beauty of this model is that there is a separation of responsibilities allowing every party to specialize. In terms of sharing autonomous cars, the aggregate of all the party’s incentives aligned with AutoNet provides them all benefits while also incentivizing sustainability of resources.
- Car Manufacturers: focus solely on creating autonomous cars to fulfill Autos-as-a-Service contracts. Builds the autos, installs AutoNet, and it begins to collect fares. Maintains responsibility for vehicles throughout and past contract, an economic incentive for sustainable designs.
- AutoNet Apps: Autonomous cars are more useful than just being a decentralized Uber clone. It would also be used for delivery, transport, and other supply chains. Each of these niches would specialize on their apps which riders use to rent vehicles currently on the road via AutoNet.
- Riders: Specialize on paying fares within their means and using their favorite app to get them from point a-b.
- Funders: In return for a share of the fares collected and global discounts on AutoNet, individuals crowdfund AaaS contracts with reputable car manufacturers, which provide vehicles for a certain time period. This also lowers the barrier to entry into the car manufacturing market, by creating a funding model that pulls production when it’s needed in the community (increased demand). For funders, it’s a safe investment to inflation-proof future cashflows while also receiving immediate discounts to more easily access everyday transport.
By creating a diversity of services which are compatible with each other through AutoNet, all party’s benefit from maximum demand.
So how could this be made possible? Right now we’re exploring the future of pensions with APG, the largest pension provider in the Netherlands. Our project is to research trends of the not-so-distant future and discover ways that pension providers can play a role in this new world.
Join us at NestEgg.eu and follow us for future updates!
