Losing A Sense Of Proportionality

A marketplace is an idea of using software to automate and amplify the ideas of supply and demand for transactions of an item or a service. It takes activities that are already happening in small opaque pockets and injects transparency and dynamism to it. In doing so, these marketplaces becomes the chokepoints of such activities perviously happening in silos and improve the experience of transacting. This creates the perception that all the “bad” dynamics around that activity are new or uniquely enabled by the marketplace.

People have been buying used clothes from other people for ages. Thredup just brought software to that activity. People have been purchasing items from strangers around where they live for ages. Offerup brought transparency and dynamism to that activity. Trucking has been a massive industry that largely has operated in small opaque pockets. Convoy is trying to become a chokepoint for that activity. Friends and families match make all the time. Tinder and Bumble just replaced humans with software.

Marketplaces don’t remove the role of middlemen in bringing buyers and sellers together. They do remove the need to have lots of matchmakers by becoming the matchmaker that uses software to replace the skills and know-how and connections of lots of gatekeepers in one big swoop.

When you have a matchmaker in the trucking business in Detroit misbehaving in how they transact, the matchmakers, buyers and sellers in Austin remain largely unaffected by it. The bad actors and their activities are just too small a fish to catch the attention of the public. Since these matchmakers are operating in opaque isolated pockets, it is very hard to identify problems even when a very large number of people across these pockets are facing the same problems. There is no one gathering the disparate views of all stakeholders and marshaling resources to solve the collective action problem in fragmented industries with siloed transactions. There is no one party to hold accountable for all the problems.

But, when you have a piece of software matchmaking in thousands of cities and working with hundreds of thousands of buyers and sellers, a small problem could spiral and catch the public attention. A real or perceived problem with a marketplace affecting a very small percentage of buyers or sellers can feel like a big problem because of not just the absolute number of people affected but also because we know who to hold accountable.

Delivering food for restaurants hasn’t ever been a glamorous and well paying job for most people. How are you going to hold hundreds of thousands of restaurants accountable for their subpar labor standards? Having DoorDash as a marketplace really helps here. Now, you have a single entity to hold accountable for all the troubles!

My main point here is this idea of proportionality. We need to come up with new ways of thinking about how much “bad” is acceptable. If you believe in the principles of supply and demand and the idea of using technology to make transacting simpler, better and cheaper, you are going to have to do the cost benefit analysis of taking down barriers for buyers and sellers to find and transact with each other.

If you hold the view that one bad incident or transaction is too many, I hate to break it to you that the world was never perfect before all these software driven matchmakers cropped up. More than anything, these marketplaces bring transparency to industry structures. Sometimes they succeed at improving those structural problems, sometimes they simply amplify them. Losing a sense of proportionality is not productive. All it does is stroke a culture and a class war. A marketplace with hundreds of millions of transactions is, by definition, going to have “bad” transactions. Yes, a marketplace with hundreds of billions of pieces of content is going to always have millions of “bad” content. Yes, a marketplace with tens of millions of deliveries is going to have dozens of drivers and truckers and shoppers with bad experiences.

Am I saying marketplaces shouldn’t be responsible? No. Am I saying we shouldn’t critique them to make things better? No. Am I saying the popular discourse around them is losing a sense of proportionality? Yes. Am I saying losing the sense of proportionality is counterproductive and often makes it harder to solve the solvable avoidable problems? Yes.