Steve Case has been discussing his concept of market arbitrage through his Rise of the Rest efforts. As a follow up on a recent post, I wanted to dig a bit deeper into the value and power of market networks.
NfX has explained the essence of a market network as well as anyone I have come across. In their words:
“Marketplaces provide transactions among multiple buyers and multiple sellers — like Poshmark, eBay, Uber, Patreon, and LendingClub.
Networks provide profiles that project a person’s identity and then lets them communicate in a 360-degree pattern with other people in the network. Think Facebook, Twitter, Goodreads, and LinkedIn.
What’s unique about market networks is that they:
- Combine the main elements of both networks and marketplaces
- Use SaaS workflow software to focus action around longer-term projects, not just a quick transaction
- Promote the service provider as a differentiated individual, helping build long-term relationships
- Market networks are also unique from a monetization standpoint. They combine the strong network effects defensibility and scalability of direct networks like LinkedIn or Facebook together with the lucrative revenue models of SaaS or marketplace businesses.”
Here is why this is relevant to the world of alternative investing:
Investment platforms that get the market network engagement and workflow dialed in will offer an opportunity to invest more efficiently and intelligently than analog models.
The premise of the advantage is that we are smarter as a community than we are individually. A network can efficiently and effectively tap into the wisdom of its members. A well crafted platform will also make work-flow associated with the investing processes more efficient than is otherwise possible with a host of individual inputs managed offline.
The point of this post is not to linger in the realm of academia, but to encourage readers with a penchant for investing to lean into a marketplace with aligned interests and help mold it into a place where you can gain personal value and advantage.
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