I don’t think that most people in Silicon Valley understand what viral means. Facebook is viral, Twitter is viral, but they think it means it spreads fast, “like a virus”, but a virus don’t just spread fast, it changes everything it touches. That is why it’s viral to begin with, because it changes the subjects it spread through. The same is true for technology; Facebook and Twitter have undeniably changed the world. We are changed as a result, Mark Zuckerberg claims that more transparency is better, I tend to agree with him, but I only think we have touched the surface. We haven’t touched anything that really matters. We have democratized media, without democratizing the underlying world that media reports about.
Business is an organism, networks of trade move value, and money is a signal, switching value among the participants, empowering the ability to act. Today this system is opaque, closed and built to defend the status quo. Huge chains of companies move money, goods and value up in the system towards those who have leverage over those who have not; this is the literal supply chain. It defines the world; the top is in the west, the bottom in the emerging world. The lower you are in the chain, the more of the value you produce and the less of the benefits you get. If you are a supplier you will be paid in 60, 90 days, just because those higher in the chain can set the terms. Causing people to get paid less, companies to grow slower and create fewer jobs than they potentially could and in the end I will argue, everyone to lose.
This is reflected in the technology of business, those who can afford it run SAP and similar. They are all built on the same idea and principle, centralize data, power and control, those who buys these systems exerts control, over suppliers and their employees. While they sell on a promise of cutting cost, cutting cost in organizations by centralizing and controlling how people work, cutting cost in the supply chain by enforcing anachronistic systems for business, that all benefit the large buyers.
They reinforce the structure of the business networks they are a part of, in a literal sense. If you were a supplier to one of our large customers before they switched to Tradeshift, you would pay a “tax” of 0.15% on every single transaction you did with them, just for the privilege of telling your customer “you owe me money” often thousand of dollars, for no other reason than because SAP could get away with it. At the same time if you worked at this company you would be using systems, that would force you to be like a trained monkey, say “yes or no” to this invoice, move this data. Most corporate systems are an extension of the assembly line, but instead of moving parts, you are moving data, our corporate software is build on 100 year old ideas about how people interact.
This is why there is no independent revolution in business, no massive network of indie developers bringing down the house and causing an internet revolution, yes maybe for small business, for the small things, but when it comes to the things that matter, the core of the economy in banking and the real value the incumbents are still tightly in control by centralizing power and building closed systems.
We propose something radical; we propose that we democratize business. That we open up the networks, that we create transparency and that we do it all with the blessing of everyone participating (except for the old incumbents). What if there was a global network for business, where everyone could participate? Where everyone would get value out of participating. Not just the top of the supply chain, where developers had free access to develop and build applications on top of shared data and where increased transparency is the result. Nobody would have said that this was possible in media before Facebook or Twitter launched, by now nobody is arguing.
This is not something we just think, it goes into everything we do, summarized the following are the values we design our product by, build our organization by and values we share with our customers:
- We value transparency over closed systems
- We prefer value generation through sharing over profit maximization
- We value collaboration over command and control
- We believe in empowering the individual over micro-managed processes
We do this by following the money, we start by offering companies a better way to connect and do what matters to them, to exchange value. In Twitter the media is the tweet in Tradeshift the media is value, money, business information and trust exchanged digitally and we open it up for everyone to participate on equal terms (free for suppliers, paid for by buyers). Today these processes are all inside the SAP system and heavily taxed, data arrive manually, as millions of invoices processed on paper in India, payments written as checks, phone calls, as a network it’s not unlike the manual process of news just a few years ago. With Tradeshift companies connect and do business in real-time, starting with the suppliers, connecting, sharing with each other and creating transparency in the supply chain, they then approach the buyer and say, let’s connect electronically, but on our terms. Without the paper business changes radically and the SAP system becomes the last stop of data rather than the central hub that controls everything.
So why will large global companies participate in this idea? Because it works. The philosophy behind SAP and their partners is slowly dying. They were created in a time were profit maximization was the primary objective for any large company, today those objectives are much more nuanced a new breed people inside these companies focus on value creation, they don’t see the world as a zero sum game, they have figured out that if their partners, their supply chain and their customers grow, they will too. This is not just technology companies, but also companies within manufacturing, health-care and most verticals you can imagine. This change is global too, in the 2.5 years Tradeshift have been live we have signed up 500,000 companies (with millions of employees) in hundreds of countries. Not because they wanted to be part of a revolution, but just because it was easier, faster, more convenient this way (just like I doubt anybody ever signed up to Facebook because they felt they needed to join a revolution). This change is real, we have companies all over the world that now are getting access to global customers, finance, data they did not have before. Because they have data they have power, they are suddenly in control and can make informed choices, they can build better companies, grow faster and create more jobs.
This is just the start; imagine what would happen if all the companies in the world is connected this way.