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Sunday
Aug022009

Why web capitalism matters

When a community of crafters passionate about "all things handmade" becomes the fastest growing selling side on the web, it is worth paying attention. In March 2008, Etsy faciliated $1.6M in sales in March 2008; by March 2009, that number was $12M. How did this niche marketplace become so hot and so beloved? When retail sales fell across the board over that period, how did Etsy record an 8 fold increase in monthly sales?

My take is that Etsy is creating value for both buyer and seller. Buyers get unique items that are sustainably produced and sellers generate direct income from their own creativity and drive. It's what Umair Haque would term : "thick value".

Similarly, when (mostly) Americans are choosing to send over $1M/week in loans to poor aspiring entrepreneurs around the world, usually in $25 or $50 incremements, something powerful is afoot. That level of lending is seen on Kiva alone. What is inspiring so many people to join the Kiva lending community?

Source: Kivalytics (a third party app)

I think that people are excited to get behind individuals who are seeking to build value through their own determination and hard work. Lenders are disillusioned by corrupt governments receiving aid but are inspired by stories of entrepreneurs creating organic growth in their countries. And many people fundamentally believe in the power of capitalism -- when properly done -- to best drive communities out of poverty.

Etsy and Kiva are among a number of value-driving online marketplaces that we've seen launch in the past several years that indicate real alternatives to the greed, recklessness, and imaginary profits currently associated with capitalism. Here are some of my favorites:

  • Samasource -- training marginalized people to perform basic internet-based tasks and connecting them with technology companies in need of those services -- "give work, not aid" (see more here)
  • Kickstarter -- providing a mechanism for creative people to fund their projects (see more here)
  • People Capital -- innovating an alternative rating mechanism to FICO for students, thus facilitating social lending for education financing (see more here)
  • Acumen Fund -- integrating investment banking approaches to international development (see more here)
  • Prosper Marketplace -- online auction market for p2p loans
  • Lending Club -- online financial community facilitating p2p loans
  • Lend for Peace -- connecting lenders to Palestinian borrowers (see more here)
  • Pertuity Direct -- providing alternative investment and borrowing opportunities by facilitating and bundling prime loans (see more here)

These sites matter because they are creating value and driving growth. They are building communities. They are enabling individuals to make meaningful contributions -- even if they are small. They operate transparently so people can make decisions confidently. They encourage creativity. They support entrepreneurship.

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Reader Comments (3)

Web capitalism is surely going to be a big part of our future and those who can recognize it will stand the chance of becoming insanely rich. it does take some knowledge of online marketing to be able to distinguish the good start-ups from the bad ones. You will see compelling advertising from start-up companies looking for investors and you need to be able to make wise decisions.

August 4, 2009 | Unregistered Commentermlgreen8753

You should also check out http://spot.us a community funded journalism project funded by the MacArthur Foundation. The platform they use is open source and freely available to other people who need a backend for crowdfunding other types of projects. http://github.com/spot-us/spot-us/tree/master

August 15, 2009 | Unregistered CommenterFreeman Murray

Thanks, Freeman for the pointer.

August 16, 2009 | Registered CommenterMelody
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