Revisiting Networks as Governments

This tweet came across my timeline yesterday:

and it reminded me of a blog post Brad Burnham wrote almost a decade ago in the context of Apple, Facebook and Twitter's growing platform power: Web Services as Governments.

Conventionally, we think of companies that make and sell a thing or a service, like Shopify 1.0, but platforms are different entities altogether.  Their incentives are different, and the ways in which they interface and engage with the customers can often be more aligned around mutual interest.  Their customers are more like constituents, and the company enacts policies and programs that benefit those constituents, and thus themselves.

It changes the dynamic quite a bit for the end-user, as in the above case, where you can get a no-interest loan within minutes without ever having to leave the platform itself.

Patreon's reportedly experimenting with a similar offering for their creators, also fueled by their own data access privileges:

Patreon Capital: An Alternative to Podcast Financing

This is a no-brainer for any platform at sufficient scale with access to capital, as it's a win-win, and the implications are huge.

For creators and entrepreneurs it provides them with the most aligned source of capital that one could find (assuming the generous terms we're seeing early on persist), which is significant especially because there's a dearth of capital available for these folks.

Also, there isn't a bank or a investor serving as a middleman who needs to get a cut.  The value to platform is growth and a more stable customer base, and an overall increase in the value of the equity of the company if it all goes well.

As an aside, there's a similar pattern with NYC's free coding bootcamp:

Click through the thread to read through the details

Back to Shopify, over time, they'll get better at lending and it'll be an incentive for new entrepreneurs to start their store on Shopify as well, making it harder for upstarts to compete.

Over time, I wouldn't be surprised to see them move to an even earlier stage, not just investing in and providing early capital to people who want to start a business, but actually providing educational programs to teach people the basics of what they need to do to operate and run their businesses overall vs. simply training them how to use Shopify the software product.

So, in addition to effectively creating an SBA, they'll also start a public school system, as well.

I haven't been paying much attention to ecommerce since it's not my area of expertise, but this helps contextualize why Stripe recently led a $20M Series A into Fast:

Stripe leads $20M Series A into Fast, which is building a universal checkout service for e-commerce

How people sell online is going through a renaissance, and it'll be interesting to see how this plays out.

But moreover, it makes me wonder what other existing services will reach a point of scale where they can play a similar role, as a sort-of post-industrial pseudo-government providing lending, education, and other critical services (perhaps even healthcare) to their constituents.