Category: economics

Along with the phenomenon of micro-lending to the poor, the idea of social lending is starting to emerge. What’s the old saying? Banks only lend money to people who don’t need to borrow? Both of these trends require that we change the way we think about trust and risk. It also may change the way we think about financing. By using a dutch auction to set interest rates in a new online market, we may see loans that a bank would never consider, and higher interest rates to cover the additional risk. This is securitization of debt at a micro-level. If the long tail of the debt market is as large, or larger, than the head — social lending is a trend that bears watching.

The network will benefit from Jason Calacanis’s recent departure from AOL. While it takes a very talented executive to take a closed network and bring it into the open — while transforming the fundamental economics of the business entity — the politics of such an endevour can be soul crushing. The power in this type of situation always resides with the entity that must be changed and ultimately destroyed. Power rarely cooperates with its own destruction.

Jason has two qualities that the current crop of Web companies need to learn. He takes business personally. He wants to compete and win. Defining an opponent can focus creativity and innovation. The second quality is that he believes in paying for value. Paying Netscape Navigators to be editors and gatherers is the beginning of an important new economy. Building platforms where this kind of value can be created and where people can be compensated is the most important building block for the next generation of the commercial Web. We need to put an end to the idea of building for profit companies on the back of free user generated content. If the content has value, there needs to be a mechanism for compensation. The network needs Jason Calacanis to fill this hole.