Algorithmic Organizing

My partner Albert penned a post yesterday (on and because of labor day) talking about the changing nature of work (more freelancers working on marketplace platforms) and suggested some interesting ideas. You can read his post here.

The two really interesting and related ideas are:

– A legal right for workers on these platforms to have real time (API based) access to the information about their work, pricing, supply and demand in the marketplace, etc, etc

– The development of algorithms (and coops and communities using these algorithms) that will allow these freelance workers to extract the best rates for their work

I believe that in the long run these platforms may/will be replaced by blockchain based networks of labor where there is no platform middleman and there would be no need for a legal right to an API because all the data would be public by default.

But who knows how long it will take for that transformation to happen? In the meantime, Albert’s ideas are really good and I would encourage people who are thinking about old school based regulation of these platforms to think instead of a new school regulatory approach along the lines of what Albert has suggested.

#hacking government#marketplaces#regulation 2.0

Comments (Archived):

  1. Joel Monegro

    This addresses my comment on Albert’s post where I agree with the idea (which I like to call a Digital Power of Attorney), but struggle with the proposition that it happens through regulation.My question was whether or not this could happen via market pressure as opposed to regulatory action (which could go wrong) and I suggested that there are some parallels between the reluctance to provide read/write APIs by these freelancer networks and that of pre Web 2.0 companies before having an API became a standard. The transition towards blockchain-based data exchange networks could be the kind of market pressure that accomplishes this.It’s also related to a question that’s been on my head for a while about how do network effects emerge when there’s no lock-in. I haven’t quite organized my thoughts yet but I think the answer is user experience, and that the result is better products.When users are in control of all their data, every market is a buyer’s market.

    1. PeterisP

      This isn’t likely happen by market pressure, since the direction of that pressure is entirely opposite – the networks extract value by ensuring that it doesn’t become a buyer’s market. As long as the freelancers won’t materially prefer having an API (as in, actually be willing to abandon a network that intentionally doesn’t provide an useful API but otherwise is better or pays better), the ‘pressure’ is just empty words.Also, the network effect creates a lock-in by itself – once a network becomes big, any smaller solution with otherwise equal qualities is less useful and objectively worse, as it has a weaker network. If networks A and B have an equal marketshare, and network A is slightly “better” in whatever way, then a natural outcome is A getting everything and B dying; but if network effects matter, and B starts out larger – then that ‘larger’ advantage likely overcomes the other factors and the slightly better network has no chance. New networks can arise as long as the new network is *significantly* better or fills a fresh, empty niche.

      1. Joel Monegro

        Perhaps, but underdogs can afford to innovate where the bigger players can’t. Let’s take ride-sharing as an example: if Uber/Lyft disruptors came out with an API, and consumers liked that, it would create pressure on Uber/Lyft to do the same. It would be very hard, but not impossible.Re: network effects: Yes. But my question is how do network effects emerge when there is no lock-in caused by data. For example, a lot of people dislike LinkedIn and Facebook but stay because there is data-driven lock-in.In a world where identity and personal information is distributed and doesn’t belong to a particular entity, but instead is in the hands and in the control of the users, data is no longer the mechanism by which companies can lock in their users since anyone can just “pick up their marbles” and move to the next compatible provider. So companies will have no choice but to innovate in other areas to retain users.A good analogy is the domain registrar business (cc @Albert). Because the domain name system is (somewhat) decentralized, and you can move between providers, registrars have to compete on pricing, product and marketing.GoDaddy wins on pricing but loses on product, and some people like that. Hover loses on pricing but wins on product, and other people like that.When services are free, though, you can only compete on marketing and product.

      2. Nick Grossman

        one interesting question is whether such a (possibly mandated) API would reduce that lock-in and make it easier for participants to leave a given network, reducing the power of the network effect.

        1. awaldstein

          If you look at this from a market and brand building perspective in the face of what Jan says above that is inevitable.

          1. Nick Grossman

            Inevitable that opening data would reduce lock in or inevitable that the platforms will do it?

          2. awaldstein

            reduce lock in

          3. Nick Grossman

            RightThe question, I guess, is how to get there

          4. awaldstein

            what i’m curious about is how this evolves if it does, your investment strategy and are you seeing anything really interesting being done today to figure this out.

          5. pointsnfigures

            Maybe not. As Albert explained in his comments, and API key lets smaller groups innovate around the platform. The connections in those smaller groups could be strong-because without one of the players the group loses economic opportunity in some way.

          6. awaldstein

            Conceptually I understand this. Understanding the true dynamics around it, don’t know.On paper yes, in reality, tbd.Question to you if if you believe this how do you as a seed investor, invest into it.

          7. pointsnfigures

            As a seed investor, you have to find companies that will build off of it. That’s the same as anything. In the example above, I am not sure that the companies will resemble scalable startups-many will be more agency or lifestyle businesses (but I could be incorrect in my assumption). Fred’s idea of the block chain gets really interesting. I truly believe in my heart of hearts that there will be several kinds of companies to invest in that marry the blockchain to different supply chains. This will take randomization out of the supply chain, and allow for more precise and efficient risk management. At the end of the day, I see these kinds of companies disintermediating traditional vertical silos like Commodity exchanges, and possibly insurance companies. Senator Rand Paul said he’d like to see the top 10 retailers get together and create their own virtual currency backed by company stock. Imagine what would happen to currency markets, and commerce if that actually came to fruition.

          8. awaldstein

            Interesting.I was never that interested in BitCoin till I started to think of it as a blockchain. Now it makes sense and seems like a forward wave to me.Thanks for the comment!

          9. pointsnfigures

            I see issues in supply chains in Ag. For example, in beef. Who owns the beef when-and who wants to own the beef when? This is an issue many times in grass fed grass finished beef because ranchers aren’t used to owning their cattle in the last few weeks of fattening. The feedlot will own them. It becomes a corporate finance problem-and it’s not easily solved because of USDA (or USDuh) regulations on vertical integration.

          10. awaldstein

            When you eventually end up visiting here we should definitely get together with the AgFunder CEO. Good guy, and I think an important service.

          11. pointsnfigures

            maybe next week. I want to go to Vermont. Never been there.

          12. LE

            You can put the idea out of your mind. Seat of the pants it doesn’t make any sense. Not every revolution or disruption in business is the right thing to do. This is one of them. There will always be exceptions of course and people who will do something and it will work for them but not as a general principle. [1]Businesses build all sorts of advantages because people are to lazy to investigate price and quality differences. So while you might walk into REI and it might be a company policy to tell you to buy a competitors bike or raft that doesn’t make it a good business principle for making money overall. Except in the mind of business professors or academics who have never run a business (end to end) and tried to make money from it.[1] Unless of course you are forced to do it because your competition is doing it.

          13. Nick Grossman

            right I only see it happening by competitive pressure (upstart platform does it, attracts users, and then gets big) or by regulatory force (unclear exactly if/how that could happen)

    2. William Mougayar

      yes, very good point about ease of data access and user experience. that is key.The API is really an App at the user level.

  2. awaldstein

    If the platform is in some ways the market, then discovery for the user and how we market as the maker changes alongside the supply equation.Got to wonder what that does to the idea of reputation and brand and how that plays out.

  3. Jan Schultink

    Perspective from a freelancer.Platforms/algorithms will do an “Uber” to many professions including probably my own field: presentation design. Competition/bidding to find effective market clearance. In quiet months, prices go down, you want something done tomorrow: pay for it.For a freelancer, I think this is ultimately a race to the bottom (Godin speak). The only profitable way to build a freelance career is to work on a distinctive personal micro brand in a super niche segment, with an ever growing base of happy clients.Maybe you use a platform to get started, but the winners will be able to wrestle themselves loose from the platform. Like the best freelancers today are often the ones that freed themselves from high paying consulting, advertising, or investment banking hierarchies.

    1. Anne Libby

      I could not agree more. +1000Exactly this: I recently met someone through a platform, used their services, and then was asked to go outside the platform for future services.A platform that solves the race to the bottom problem? There’s a winner.

      1. JamesHRH

        Did you, he asked, thinking he knew the answer?

        1. Anne Libby

          I would have. After thinking about it for a bit, decided that I owed more to the creator of the service than I did to the platform.It was an uncomfortable request to field.In the end, something else came up, and I wound up using the services of a neighborhood business instead.The problem with these platforms is not the platform. It’s the mean reversion.

    2. JamesHRH

      More than ever, creative people need to build ‘full stack’ offerings.

      1. awaldstein

        Interesting….what do you mean by this?

        1. JamesHRH

          Its an a16z concept. They like startups that deliver the entire value chain to customers.In Oldy McBizSchool parlance, creative types have to be vertically integrated these days, otherwise you are rapidly commoditized.In practical terms, you can’t energize yourself by having constant stream of new things float by you any more.Its time to pick something, use your abilities to make it awesome and then commit to delivering all that is required to the customer.Collaborate, control or cower, basically.If you are a freelance problem solver / alternatives, options, idea generator creative type, geographic or industry boundaries do not protect you. The playing field is level and the best reputations will take the best situations at the best prices.You will fight for scraps and get paid accordingly.

          1. awaldstein

            My favorite comment of yours to date.I have scars for each and every piece of learning you mention.

          2. Donald E. Foss

            I just might use that myself.

          3. bernardlunn

            Great insight, fits my experience. Its really about rising to the top of the stack and using the commodity providers further down the stack.

    3. ShanaC

      This is sad, because often those groups are not necessarily the ones that adopted the best practices from the start.

    4. ErikSchwartz

      The platform model works well for what are essentially commodity services (like a driver). As for many other services, not so much. They are really about a relationship with clients and as soon as the client actually has your contact info there’s no reason to continue to use the platform.It really doesn’t matter which Uber driver I get assuming they pass a minimal level of competence. It very much matters what graphic designer, or family photographer, or database architect.

      1. Salt Shaker

        Exactly. Use cases limited to commodity businesses.

      2. PhilipSugar

        Drivers are not a commodity. When I encounter a really good one they give me a card and tell me to call them directly.

        1. ErikSchwartz

          Yup.So the really good drivers use Uber to build a client list and the marketplace companies lose the good providers.FWIW, this is exactly what my wife did with Thumbtack and her photography business.

  4. Barry Nolan

    My brain is too small to compute “platforms may/will be replaced by blockchain based networks of labor”. What does this mean in small-brain-person English? – that contract / settlement / payment is peer-to-peer and not through a middleman?

    1. JimHirshfield

      You answered your own question. Ergo, your brain is bigger than you think.

      1. Barry Nolan

        Hurrah. I thus declare myself a genius.

          1. Barry Nolan


          2. William Mougayar

            You’re mixing your Alberts.

          3. JimHirshfield

            Hahaha… Good one! Wenger’s a genius in my eyes.

          4. LE

            The quote doesn’t even make any sense (oh boy he takes on Einstein, what guts, huh?) as written.What in the world does “if you judge” have to do with “it will live its whole life”?Shouldn’t it be “if a fish judges it’s ability”?Or a better example might have been with a parent and a child. Then the quote “if you judge your child” … “they will live their whole life” would make more sense.Besides people do exactly that. They judge someone as smart and what they say as valuable in many areas if they are accomplished greatly in one area.

          5. Kasi Viswanathan Agilandam

            Let Einstein’s soul RIP…don’t judge his quote with literal English!!! 🙂

          6. LE

            I don’t believe in the principle that anyone (Einstein or otherwise) is untouchable in the way you are describing.And if you never judge or critique you never learn by the way…

          7. Kasi Viswanathan Agilandam

            I agree that NO-ONE is untouchable … but, You forgot my smiley face at the end of the comment … anyhow, what I meant was “Einstein can make mistake”.

          8. JamesHRH

            That’s a fantastic quote.i don’t agree with him though. My Pops was a genius and I thought about what it takes to operate at that level.Everyone has talent (as Albert is getting at), some people work hard at developing the craft associated with that talent, but very, very few people are willing to commit to the craft at a level that ostracizes them from others.That is what genius requires.

          9. JimHirshfield

            Not knowing the context, I’d say Einstein was addressing his being labeled a genius, and how he likely just saw himself as a deep thinker who arrived at some incredible scientific insights. He was a poor student, after all. So, IOW, from his POV, if he’s a genius, then everybody must be a genius. Let’s call it Einstein’s humblebrag moment.

          10. LE

            I’d say Einstein was addressing his being labeled a geniusWhat’s interesting is that Einstein was labeled a genius back in the day when there wasn’t the type of media ADHD that there is today. So you had those movie tone reels in theaters, the local paper, the radio and then a bit later TV. All that was useful in brandishing someone’s reputation in a world where there was no where near the same distraction as there is today. Einstein stood out.There really isn’t much explanation other than that for why “normals” or the general public would understand much less care about the things that Einstein discovered. It’s way over the head of everyone. But things that were talked about in the news back then (and on movie reels) had impact.The Einstein brand had much impact. Hard to believe that anything close to it would exist today with the same accomplishments and people’s short memory and the next news cycle around the corner.From the wikipedia page this is pretty telling of how much he was worshiped, even back then:During the autopsy, the pathologist of Princeton Hospital, Thomas Stoltz Harvey, removed Einstein’s brain for preservation without the permission of his family, in the hope that the neuroscience of the future would be able to discover what made Einstein so intelligent

          11. JamesHRH

            I like that.

          12. bernardlunn

            you are on fire today “very, very few people are willing to commit to the craft at a level that ostracizes them from others” is deep!

          13. JamesHRH

            My father had very few friends in his chosen field, It was an adversarial process and he crushed people. Great guy outside of court, but untouchable in a courtroom. Because of the things i have listed.Not sure how deep it is. Very sure it is true.Applies to @fredwilson:disqus obv.Thanks for the kind words – recently moved back to Alberta and the bracing mountain air must have the grey cells in gear!

      2. LE

        One shouldn’t have to think or read something over and over again in order to understand something.

        1. JimHirshfield

          Me thinks you’re referring to your previous comment, but I can’t be sure, having read it 3 times.

          1. LE

            “Me” comments stand on their own as discreet thoughts independent of any other comment that I might have made.When the comment needs collateral support it either gets a footnote, a link, or a quote from another comment that I or someone else made. I don’t typically (wiggle room here) depend on someone reading a previous comment.

    2. Richard

      First things fist to getting people to understand (and ultimately) use the “bloc chain” is to rename the “bloc chain”.

      1. Barry Nolan

        Totally. Reminds me when the web was a new born and on the TV they’d call out an address. “Type in lowercase h t t p colon forward slash, forward slash …”Now its ask the google to paraphrase my mum

        1. Richard

          Yep, one thing is clear about the tech. It has an abysmal track record when it comes to UX. Even with the lessons of the successes of Steve Jobs, it still can’t figure this out.

          1. Barry Nolan

            They most successful UX’s strip interaction to the minium, and speak in clear, human terms.Buy now with 1-clickLikeSearch

      2. SubstrateUndertow

        Not so sure it’s the naming of the rose but more the shared practice of viscerally experiencing the smell of roses that bestows wider perceptual appreciation ?Still I agree, even after the functionally practical attributes/benefits that can be generically constructed atop varying instantiations of “bloc chain” have been viscerally experienced in enough flavours by everyone, a better/more descriptive perceptually-ergonomic handle would still be very useful/helpful !So what name would constitutes a more widely accessible perception of “bloc chain’s” generic functional-value/processing-attributes ?I’m still pretty fuzzy at visualizing the generic algorithmic-mediation/public-auditing opportunities made possible by crossing the rubicon into “bloc chain” territory.A visually oriented game that exposed players to a variety of algorithmically mediated/audited behaviours made possible under “bloc chain’s” functional attributes, where competing players are forced to viscerally experience an incrementally expanding set of “bloc chain” mediation/auditing patterns, all played out as visual allegory, would be a really cool education tool ?

    3. bernardlunn

      Check out a platform called Ethereum, they are enabling applications like Fred mentioned.

  5. ZekeV

    take a look at deckbound / = platform for independently developed collectible card game with portable game assets. i think this is the best model to date for decentralized organization around scarce digital asset. the developer has an interesting pricing algorithm, but only enforced for the initial game (not for other implementations built on same assets)

  6. JimHirshfield

    How about a vacation API with real-time access to your itinerary, location, venue, menu, leisure activity, POV images, beverages consumed, books read, heart rate….? …crickets…

    1. fredwilson is close but its a day or two delayed

      1. Mario Cantin

        Yeah, she takes wonderful pictures of food dishes. What type of camera is she using?

        1. fredwilson

          Nikon L830

          1. Mario Cantin

            Thank you.

          2. jason wright

            a car without a steering wheel is not a car as we know it.

    2. jason wright

      i want the anti (photo) portfolio. scenes of the dark underbelly of modern southern Europe.

      1. JimHirshfield


        1. jason wright

          yeah, venture capitalists have their investment anti portfolios, and there ought to be the holiday anti photo portfolio too. graffiti, African migrants, drug dealers, et.c.

          1. JimHirshfield

            Oh. Got it.

      2. Carl Rahn Griffith

        See GG’s blog post today re Genoa. This is pretty much the real-world for many of our cities/urban areas. We ourselves are as poor as church mice compared to a few years ago, but thankfully live in the countryside so detached from it.It will only get worse.

        1. jason wright

          one of the reasons i cycle through the countryside, to escape the urban degeneration.up the reds!p.s. i just went across to gg’s blog. i’ve never experienced that feeling on the streets anywhere in Europe. Budapest had a slight edge to it in the evening, but not threatening.

          1. Carl Rahn Griffith

            Much of London is horrendous at night. Which is odd as most capitals are enforced to feel safe for economic reasons – meanwhile, provincial cities are going to hell; in a hand-cart, not an Uber (especially in Germany, lol). NYC was one of the places I have felt safest at night; I hope that hasn’t changed. Bifurcation of personal safety, also…

  7. William Mougayar

    I like the concept Albert introduces; which is to basically add a decentralization factor to good old demand/supply dynamics and proprietary information intelligence, and put it in the hands of workers and users. It kind of flips the model on its head, and changes the role of the center.Can I get that for my medical records and history?

  8. JLM

    .Markets are almost always about the “discovery” of an elemental connection and ultimately a more efficient connection between sellers and buyers. Part of that is price discovery.Two virtually identical goods or services are being sold — the efficient market will allow the buyer to discover the best price for the virtually identical goods. Logic would suggest that the lower priced good or service would be the one more likely to actually transact. Again, all things otherwise being equal.When goods are not “identical” the differences may be the basis for a valuation difference which would suggest a buyer would buy a more valuable good or service based on condition, quality, administration, warranty or other qualitative parameters. One or more of these parameters may be determinative — Amazon’s shipping or return policies.In the Internet Age much of that qualitative difference is subsumed in the notion of “reputation management” based on transaction feedback. The freelance marketplace already has a very comprehensive feedback, testimonial and reputation management loop.The idea that the disruption or networking of an industry should be reinforced or somehow enhanced by the imposition of more regulation seems contrary to the basic premise of disruption itself.The simple matter of it all is that the ability to access foreign or geographically remote talent is often driven by price and price alone. While that difference may be unwelcome to domestic suppliers, it may be the only way that foreign or geographically remote talent can get into the game.In the end, the march of technology is often about the standardization and repricing of previously custom or bespoke services as well as the embrace of huge pricing differentials.Historically this has given rise to the organization of craft guilds and unions to provide pricing leverage for the suppliers of talent.JLM.

    1. LE

      The idea that the disruption or networking of an industry should be reinforced or somehow enhanced by the imposition of more regulation seems contrary to the basic premise of disruption itself.I just looked it up and have already diagnosed it as a form of “liberal mania” early and/or late onset. Typically espoused by people who have little to lose economically or otherwise or perhaps don’t particularly care if they do lose something in order to help another human being or by doing so can make more money for themselves. Like the Nun who doesn’t mind driving a used Chevy or a tech overnight success who goes to Burning Man.I can’t imagine any business owner who is going to allow this type of thing to be pried unless it’s from their cold dead hands.

    2. JamesHRH

      There is a trickle down theory of consumer goods & services;Billionaires do it; the millionaires do it; then everyone does it (well, to a point).The easiest one is domestic staff: 30 years ago, only UHNW families have them. Now, maybe, 30% of two income middle class families do?

  9. pointsnfigures

    Yup. Like that idea. Today, they banned Uber in Germany. http://bits.blogs.nytimes.c… Albert’s idea is based on Coase Theorem. It’s a bigger idea than you think when you examine it and if you add in the Block chain it gets really interesting.Markets work better when market participants have access to better and more timely information. If Uber is a market, then going Albert’s direction will make the market perform more efficiently.

  10. Richard

    It’s not just freelancers that would find this data useful. The buy side would of course be able to make better decisions with this data, but so would local, state and federal govts. So would industries like home builders. Even the federal reserve would benefit as even monetary policy could use and become part of this block chain.

  11. LE

    You:- A legal right for workers on these platforms to have real time (API based) access to the information about their work, pricing, supply and demand in the marketplace, etc, etcAlbert:Definitely related and I should have mentioned it so thanks for doing so. My point though is that a legal right to and API key would enable all sorts of VRM tools to spring up that are currently impossible to build. There is a need for some regulatory intervention here and I am proposing oneIf I’m reading this right you’ve (Albert) have got to be kidding.You want to pass laws “a legal right” that require a company to give up a valuable asset that they have built so they no longer have a competitive advantage?Next? How about we require hair salons and restaurants to allow API access to their detailed customer info so that another hair salon can see that “LE doesn’t like head massages when he gets his hair washed”.Or you maybe you want employers to allow api access so that another potential employer knows everything and anything about how and when someone works and what they do. So they can more easily poach them and don’t even have to use linkedin?

    1. Amar

      This is a great question. The simple alternate solution is “collect the data from the consumer and not from the merchant/seller”. Of course it is freaking hard to collect all this granular transaction data from the consumer because he/she just wants to get on with their life after buying/selling whatever product/service that happen to fit into their day. Your average consumer does not want to spend 20 mins documenting every aspect of the transaction in a mobile app … they want to live their life.Instead of solving the really hard problem, are we trying to forcibly regulate the people with access to the data and pry it from them? 🙂

    2. ShanaC

      Some of these things are necessary, otherwise labor prices drop to 0. O-desk has prices nearly at 0. . IN places where the end consumer can’t see how labor productivity affect them, there have been issues of wage-theft.

    3. bernardlunn

      Hopefully Albert meant that it is your legal right to own data about yourself, even if you delegate the maintenance of that data to others. Data that we already surrendered prior to such legislation would remain owned by whatever laws were in place at that time.

  12. Andrea Canidio

    Interesting thought about the block chain. To me, one of the benefits of using the block chain is to let people efficiency subcontract tasks or entire jobs by “trading them” on the network. The resale of tasks could turn out to be a big deal. I actually wrote up some thoughts on this some time ago:…If you can’t read the whole thing, just ask to be “invited”.

  13. Salt Shaker

    Growth of freelancers (or independent contractors) by companies such as Microsoft is nothing more than a nod and a wink to bypass labor laws and IRS requirements. Good for the bottom line (no employee benefit obligations), but not sure how they continually get away with it. A huge number of Microsoft employees are independent contractors that don’t have coverage or benefits provided by U.S. labor laws.

    1. Carl Rahn Griffith

      I refuse to do freelance work now – used and abused too many times – happier in my steady low paid bar work until something permanent comes along in business/tech – I’m not holding my breath, mind…

  14. Ciaran

    My innate cynicism says this won’t happen because all that investor cash the likes of Uber are currently using to lobby against regulations they don’t like will later be used to lobby against proposed regs that might threaten their profit, such as the one described. There’s nothing in being a start up that precludes it developing the monopolistic tendencies old school corporations have