Markets in everything: p2p education

It will come as no shock to most readers that I think one of the key opportunities of the next decade or so is to harness the possibilities unlocked by the advances in ICT – most notably the continuing march towards a ubiquitous, high-speed internet – to vastly lower transaction costs and enable robust, distributed marketplaces to emerge in sectors and activities where heretofore the (informational and transactional) costs of organizing such a market would have been prohibitive. While it is certainly an oversimplification, I think such opportunities can be broadly categorized into two groups:

• those that make the transactional mechanisms of existing markets more efficient – either incrementally or by a quantum shift to a new market structure – by reducing informational friction and arbitrage and eliminating parasitic intermediaries while at the same time massively improving the productivity of ‘intelligent’ intermediaries; and
• those that enable markets to emerge where previously none existed at all (or only in the broadest economic sense, but where transactions were previously ad hoc and opaque), often (but not always) these are markets for services (rather than goods or financial instruments) where the nature of the service is highly heterogeneous and in data terms is “unstructured” rather than “structured”*

Putting my money where my mouth is, I’ve taken the opportunity to invest in two exciting start-ups that fall into this second group: last year in seedcamp ‘07 winner MyBuilder.com and just now in (seedcamp ‘07 finalist) School of Everything. Both have passionate, energetic and visionary founders that have been able to translate their ideas into robust and well-executed platforms for organizing and ‘trading’ specialist services. As for any pioneering start-up, neither can be sure of success, however the combination of a fundamentally sound idea, in harmony with the inevitable secular change in how economic activity will be organized in a networked world, married to a strong committed team is as good a place as any to start.

I must admit in the case of SoE, part of my motivation to invest was driven by a more emotional and/or intellectual interest in what they have set out to do:

Our current education system was designed in the industrial revolution to prepare people for factory work. The world has changed a lot since then – and the time has come to rethink education from the bottom to the top.

At School of Everything, we believe that learning is personal, and starts not with what you ’should’ learn but with what you’re interested in. So we’re building a tool to help anyone in the world learn everything, and teach anything, how and when suits them – by putting people in touch with each other, not with institutions.

Not only is education and learning the lifeblood of our modern economy and an important social good, but by creating a marketplace for people to ‘distribute’ and acquire skills and knowledge, SoE is providing another very useful output for harnessing what Clay Shirky has identified as society’s “cognitive surplus.”

Now, the interesting thing about a surplus like that is that society doesn’t know what to do with it at first–hence the gin, hence the sitcoms. Because if people knew what to do with a surplus with reference to the existing social institutions, then it wouldn’t be a surplus, would it? It’s precisely when no one has any idea how to deploy something that people have to start experimenting with it, in order for the surplus to get integrated, and the course of that integration can transform society.

The early phase for taking advantage of this cognitive surplus, the phase I think we’re still in, is all special cases. The physics of participation is much more like the physics of weather than it is like the physics of gravity. We know all the forces that combine to make these kinds of things work: there’s an interesting community over here, there’s an interesting sharing model over there, those people are collaborating on open source software. But despite knowing the inputs, we can’t predict the outputs yet because there’s so much complexity.

The way you explore complex ecosystems is you just try lots and lots and lots of things, and you hope that everybody who fails fails informatively so that you can at least find a skull on a pikestaff near where you’re going. That’s the phase we’re in now.

So if there is something you’ve always wanted to learn, or something you’d love to teach to others, School of Everything is a pretty good place to start. I wonder if anyone is giving courses on how to run a bank…you’d think demand for that might be pretty high these days… Given these tough economic times I suspect that SoE is even more useful, whether it’s to learn a new skill to keep an existing job (or find a new one) or to earn a bit of money and/or social capital by teaching if you’ve suffered the misfortune of losing your job or are working reduced hours.

In any event, I’m very excited to become a small part of this and congratulate Paul and his team on this follow-on funding and wish them great success in building SoE into a wonderful global marketplace for learning.

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