The Law Of Unbundling
- Posted by Leigh Drogen
- on December 1st, 2012
I can’t believe I somehow missed Andy Weissman’s post back in August titled “The Great Fragmentation” because it is BRILLIANT.
As many of you know, I am always looking for people and post which synthesize big world changing paradigm shifts. There are many people who can point at the pieces, but few who can stand back and see the forest. For me, Thomas Friedman did this for Globalization, Rachel Botsman did this for Collaborative Consumption, and Andy Weissman, though in a very brief way, has just done it for me again.
Weissman, without actually proclaiming it, puts forth the Law of Unbundling.
Allow me to explain.
For a few years now I have been railing against Facebook’s strategy of attempting to provide users with a social walled garden where all of their interaction with others on the internet takes place. I call Facebook “the internet for idiots” and compare it to AOL in that AOL attempted to do the exact same thing a few decades ago, except it was the basic internet then, not the “social web”. I have shouted over and over again that social is a layer, it is not a destination, that Zuckerberg is 100% wrong to believe that he can build the one graph to rule them all.
At the same time I have seen Craigslist decimated by platforms like Airbnb which does a better job at short term housing rentals, and dozens of other platforms that have taken bites out of Craigslist by creating a vertical to service that community in a much better way. Craigslist is the Facebook of commerce, they attempt to provide a platform for everything.
The reason that Andy Weissman’s post is so amazing is that he NAILS it by explaining this phenomenon by using the term “unbundling”.
Basically, the law would state that as technological innovation touches each industry it causes entropy to increase. Put more simply, there will be far more fragmentation. Weissman states:
What if the power of connected networks such as the Internet is that they unbundle all that came before them? They disintermediate incumbent industries but also do the same to any new attempts at re-aggregation?
AOL was destroyed when users were comfortable enough exploring the vastness of the internet without having it spoon fed to them. The walled garden of AOL went from safe and easy to confining. Craigslist went from being the place where you could find anything to the place that didn’t let you find anything as well as the sites building verticals.
And that brings us back to Facebook. Facebook has gone fromt he safe and easy way to participate on the social web to the confining walled garden that doesn’t really do anything social that well. It is a polluted atmosphere that does not serve any one social purpose well. It is a platform built for the purpose of being social, when in fact “social” is a layer that belongs on just about everything throughout the web. It will die the same way that AOL did, when enough people get comfortable engaging socially throughout the web.
This is the law of unbundling, and it is about to destroy the current infrastructure of education as we know it. Weissman:
Education is being unbundled into its component parts: content, teachers, credentials,community, physical campus, mentors, hiring and network.
Oh my god is it time for this to take place. There is no point in having to attend a 4 year college to get credentialed. Likewise, there is no point in having to go to a 4 year college to build a network. Why do we attend a 4 year college to “grow up” when there are many better ways to become an adult and learn life lessons without wasting all that money and confusing it with education and gaining a credential. Why do teachers have to only teach to a handfull of students, why can’t they teach to the whole world if they are great at what they do.
The Law of Unbundling is a great framework to think about how companies and industries will be disrupted, just as globalization is a great way to think about how both macro and micro economics works today on a global level, and how collaborative consumption is transforming the way people utilize exces capacity in their assets and themselves as well as recycle those assets.
Go read Andy Weissman’s post “The Great Fragmentation“.
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Leigh Drogen is the founder and chief investment officer of Surfview Capital, LLC, a New York based investment management firm employing an intermediate term long/short momentum strategy. More »
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