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1 Dec

Startups are the New Middlemen

It seemed for a time that every start-up was poised to be the next Facebook or Google. Everyone had their hopes on scaling exponentially, allowing them to "spread their wings" so to speak and branch out into innumerable related markets. While that may still be the dream for new startups, more and more it seems that they are filling a new role.

When we look at AirBnB and Uber, or the restaurant reserveration app Velocity, or the "TicketMaster Killer" Ticketfly, these startups seem to be in a very different position than the software companies of the old. Indeed, they are not quite software companies as they are app companies, and even more so they are marketplaces. Rather than, like Facebook or Google, attracting users in order to later monetize their social activity with advertisements, these startups aim to be the marketplaces for particular goods and services in order to take a commission on every transaction to take place within it.

While it was once proclaimed that the Internet would lead to the "death of the middlemen," with wholesalers like Amazon or Alibaba disrupting all sectors of the retail market, it now seems that startups are actually becoming something of the new middlemen. Given the prior capture of production-goods by the aforementioned wholesalers, however, their territory has been skewed towards the service sector, or at least towards products that require additional service which cannot be boxed; Ticketfly, for example, must not only sell tickets, they must provide venues with a way of verifying the tickets that have been sold.

With most of these new middlemen emerging in the last few years, we are sure to be in for a wild ride as they begin to find what other services they can facilitate.

Please contact us to learn more about exciting developments in the software industry.

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