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Dear avid readers,

There have been a lot of new subscribers to this strategy digest lately, so as well as extending a very warm welcome to new joiners, I feel I should point out that previous editions of this newsletter can be found on our
archive page here. They're full of (atemporal) gems.

At
aperture, we publish our own articles here, as well as our podcast where we are in discussion with people thinking and doing things differently (please listen and subscribe on either Apple Podcasts, Spotify, Stitcher, Soundcloud). 

On to the digest.

The end of the anti-social corporation

From Shareholder wealth to Stakeholder interests: CEO Capitulation or Empty Doublespeak?  The big news a couple of weeks back was that the CEOs of some of the largest American corporations vowed to renounce the shareholder value maximization dogma, and take a new approach to running their businesses, one that maximizes all stakeholders' value (including employees, customers, the environment and the community, even suppliers). A lot of opinions were voiced on the subject, from this being long overdue to this being just a PR play and how it is impossible to execute under current legal frameworks. I will single out 's take on the subject. Aswath lists five different types of corporatism, and invites each one of us the make our own conclusion of what should be the norm: (1) cutthroat corporatism; (2) crony corporatism; (3) managerial corporatism; (4) constrained corporatism (government-, self-, and market-driven constraints); and (5) confused corporatism (we'd love to get your feedback on this - please reply to this email and we will publish some of your thoughts in our next edition)

Then came the response from the co-founding companies of B Corp movement stating that there actually is a model for adopting stakeholder governance and transparently measuring impact across all stakeholders, while making a profit. Has been for almost a decade now. 

This takes me back to January 2018, when Airbnb, back then the on-demand accomodation tech company, made the commitment to be a company that is governed by two principles: (1) infinite time horizon; (2) its purpose is to serve all stakeholders. It even promised to deliver its first Annual Stakeholder Report in March 2018 - to prove that this governance is possible - but 18 months later, we still haven't seen it. Back then, I published in August 2018 an article stating that both Airbnb's slowing growth problem and increasing community-backlash problem can be strategically solved by doubling-down execution on their stakeholder-governance promise in one way: creating a reserve army of emergency hosts.


Airbnb is executing this well, but still haven't seen any Annual Stakeholder Report yet.

The End of The Corporation — Erik Vermeulen had an interesting take. The statement from the Business Roundtable was nothing more than the first step in acknowledging the end of the corporation. These corporate leaders were pointing out, unwillingly, that the corporation as we know it is being disrupted and something very different is emerging. The fading importance of mass production, the diminishing brand loyalty of customers, the changing aspirations of employees, the increasing tools available to investors. All these changes make the corporation irrelevant. Erik articulates that, in order to stay relevant, every business must foster ecosystems: they must become tech companies, as well as media companies. 


What are tech and/or ecosystem-enabling companies?


What Is a Tech Company?  One definition attempt comes from Ben Thompson - although not related with the shareholders vs. stakeholder statement - but sparked by the ambiguity around WeWork and Peloton. Are these firms tech companies? Ben argues that being a tech company depends on how much of the business is governed by software’s unique characteristics: software creates ecosystems, has zero marginal costs, improves over time, offers infinite leverage and enables zero transaction costs. Another way to look at it is via Clayton Christensen's sustaining vs. disruptive innovation concepts, as the article claims that "if adopting technology simply strengthens your current business (sustaining innovation), as opposed to making it uniquely possible (disruptive innovation), then you are not a tech company. If you make something possible that wasn’t previously, or at a price point that wasn’t viable, then you are a tech company." With the caveat being that a tech company does not necessarily mean being successful --- the other challenge is capturing back some of the value generated as consumer surplus (on this basis and on the fact that it does not have zero marginal costs, we made the claim a couple months back that Spotify is not a tech company).

For another take at what a tech company is, we recommend revisiting our friend Nicolas Colin's definitiona tech company has a business model marked by increasing returns to scale; its main strategic goal is to provide its users with an exceptional experience at scale, and it collects user-generated data on a regular and systematic basis — which enables it to constantly improve the experience and, again, sustain increasing returns.

 
An Entrepreneurial, Ecosystem Enabling Organization — Maybe another source of inspiration for CEOs and the future of their organizations is China's Haier, via Simone Cicero's excellent framework of key elements of Haier's ecosystem principles: (1) becoming a coherent set of loosely coupled, independent units (being made of a network of Micro Enterprises); (2) becoming powered by a culture of independence and entrepreneurship (Creative entropy and initiative from periphery as pillars); (3) becoming ecosystem-driven in choices and strategy - the user (the ecosystem) is in charge and employees are “paid by the user” and not by the organization.


Building marketplaces for high-complexity services

If we accept that the central role and power of the corporation is fading way, then one strategic assumption related to workers is that they will want to sit "outside companies" and choose the work they want to do. This creates the possibility of creating new business models, aggregating service providers and matching with demand at source.

8 Things to Consider When Building Managed Marketplace Companies Li Jin of a16z has mentioned before that the next stage of marketplace businesses is in the area of more regulated, managed services, such as occupational-licensed work. In her latest article, she writes that it is exactly this artificial supply-constraint imposed by licensing and regulation that makes these service verticals particularly interesting in the context of marketplace-building. Supply-constrained markets hold advantages because there’s already a large pool of demand that wants a particular service; if such marketplaces are able to win the supply side, they can capture a ton of value. Her advice is that the factors to consider when assessing opportunities for new marketplaces operating in a regulated industry include: (1) downside risk of unlicensed supply, (2) burden of licensing requirements, (3) existing industry satisfaction, (4) opportunity to lower prices, (5) market size, (6) latent demand, (7) underutilized assets to unlock supply, and (8) tailwinds around regulatory reform. 

Service & Marketplace-model fit — Parth Sethi writes that services, by nature, are ambiguous and their lack of standardization makes it hard to create liquid online marketplaces. In his article, he lays out a framework for looking at services marketplaces based on complexity vs. frequency of service, and identifies the 4 categories where successful marketplaces have been (and and can be) built, as well as two misfit categories.

The design patterns of work — In this increasingly interconnected world where technologically-augmented ordinary people have access to the newest solution tools even before corporations, writes Esko Kilpi, creative and connected learning is at the core of the new logic. The task is to design value creation on three patterns: (1) a relational focus - communities continuously organizing themselves around shared contexts, meaning shared interests and shared practices. (2) creating network effects - with digital commons, unlike physical commons, the more they are used, the more valuable they are for each participant; and (3) solving meaningful problems. 

The strategic imperative of post-industrial organizations relative to satisfying the demands of the changing nature of work is, as per
aperture subscriber John Hagel, Scalable Learning. And that involves acknowledging the effects of creative compounding and enabling networks of niched communities where masterful curation is a core, writes aperture subscriber Brett Bivens
 

Remote work, commuting and wellbeing

Rush Hour: How 500 million commuters survive the daily journey to work  This is a fascinating review of Ian Gately's book on the history of commuting, written by aperture subscriber Laetitia Vitaud. While commuting daily to our physical place of work is clearly an environmental disaster and a nightmare of personal discomfort, is the actual narrative that remote work (from home) will solve these pain points a valid one? It does eliminate the need of commuting entirely, but what if commuting (if made easier again) would still make people happy? 

Building Bolligen Tower The same view if echoed by Brett Bivens (double-featured in this digest), that despite the rising nature of distributed work (meaning work performed from outside co-located corporate offices), people are still vastly under-equipped to deal with the different emotional and physical requirements posed by working in a remote, isolated setup. The argument is that people would still want to leave their homes most of the days, but work remotely from a place that is a higher match with their personality, needs, changing mood (be it weworks, cafes etc.) The opportunity that Brett illustrates is a data platform that sits on top of all physical places that could match workers in an adhoc basis with physical workings spaces depending on various changing criteria, including the need of social interaction with likeminded peers. Like a StitchFix for where should I easily commute for work to today.
Ending this edition with a few fintech snippets from Switzerland. 

We wanted to highlight the latest Swiss fintech unicorn, Numbrs (previously known as Centralway Numbrs). It currently boasts 2 million app downloads and EUR 10 billion in assets under management. Numbrs is a B2C mobile-only aggregator and distribution channel of banking products headquartered in Zurich but operating mainly in Germany, as well as piloting its service in the UK.

Interestingly, their business model started before the PSD2 Open Banking wave. They offer bank account aggregation, PFM, loyalty cards management, peer to peer payments, banking and insurance products supermarket, simple origination and onboarding (chat-based). To better understand how the neutral aggregator model fits with other banking business models in the digital age, we're recommending this article written last year by my colleague Ben Robinson.  
One other interesting development is the granting of banking and securities dealer licences by the Swiss banking regulator to two crypto-banks: SEBA and Sygnum. They are now allowed to operate in the tokenised digital securities space, presumably solving a major point for users which was safe custody of digital assets.

But what I do want to flag, however, is the company that enables banks of all kinds to operate in the tokenized economy (they even work with incumbents banks outside Europe), which is METACO - offering integrated software and hardware solutions that provide a unified environment for banks in need for a comprehensive self-custody infrastructure. Think of them as the Coinbase Custody, but with the Swiss touch. They are, incidentally, raising money if any of our VC readers are interested.

Until next time, together with my colleague Ben Robinson, we're working on a new aperture article looking at the shifting opportunity in the banking software value chain. If intrigued, share this newsletter with others, subscribe if you haven't and most importantly, let us know your thoughts about the articles shared here or about projects you're working on.

Warm regards from Geneva
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S U B S C R I B E
My name is Dan Colceriu, head of research at Pangea, and I hope you enjoyed this read. 
The a p e r t u r e | Newsletter is part of a broader community built on the exchange of ideas and practices around strategy, technology and the dynamics of the platform economy.

I'd like to know more about the work you do. And here’s the email to reach out: newsletter@aperturehub.co

Warm regards,
Dan


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