Trusting platforms

In response to my post yesterday about how an internet of people has enabled a new wave of web-based marketplaces, Nick Mango commented:

There’s actually 2 levels of trust here. The first is knowing and trusting the person you’re buying from. And if you don’t know who they are, then you must move on to the second level of trust, which is do you know and trust the platform the person is using.

The ability to have “second order trust” is one of many reasons the internet has made so many institutions obsolete. Take the SEC’s role in policing private companies that market themselves to potential investors. This was sensible consumer protection back when the government was arguably the only organization that had the means and incentives to identify fraudulent investment schemes. But today we have many examples of websites that’ve built mechanisms for reliably tracking the reputations of individuals and organizations. This means the SEC could – in theory – make the unit of regulation platforms instead of investors and startups (something the crowdfunding bill being considered by Congress seems to do at least in part), which in turn could unleash a new wave of innovation among crowdfunding platforms and crowdfunded startups.

http://twitter.com/JasonShen Jason Shen

Nick makes a great point.

Every platform has to decide how much trust they want to create for their users. For instance, Craigslist divorces themselves from any liability for transactions that happen with the site.

On the other hand, Airbnb had such a beautiful and trusting site that they almost erred on the other side, which led people to being perhaps a little too casual with their rentals.

The ideal web-based marketplace gives users a welcoming experience on their platform AND equips them with the features to learn about and build trust with the other people on the site for themselves.

FAKE GRIMLOCK

THERE REASON CRAIGSLIST NEVER GROW BEYOND BE SEEDY BACK PAGE CLASSIFIEDS OF INTERNET.
http://www.about.me/briankung Brian Kung

Even given the ability to rate other users, though, I think Nick is talking about the trustworthiness of the platform itself. For instance, recent concerns about the trustworthiness of Yelp, Groupon, and even the BBB hint at platform trustworthiness as separate from user to user reputation systems. That’s why consumers at POS don’t trust Square devices – they’d rather see standard credit card machines. At least in my experience.

At what point is a platform considered trustworthy, though? Just after reaching a certain critical mass of users?

FAKE GRIMLOCK

INTERNET REMOVE MIDDLE MAN FROM TRUST EQUATION, LET END USER JUDGE FOR SELF.

http://www.alearningaday.com Rohan

Yup. Exactly.

Anonymous

It seems to me that it’s not so much about trusting the platform; rather the platform gives the tools to trust the other party – eg eBay’s seller ratings, sedo escrow accounts, etc

http://www.about.me/briankung Brian Kung

At the same time, recent concerns over the trustworthiness of platforms like Yelp, Groupon, and the BBB point out that platform trustworthiness is separate and worth consideration.

http://www.about.me/briankung Brian Kung

I’m not sure I understand what you mean by “the SEC can now make the unit of regulation platforms instead of investors and startups.” Does that mean the SEC can focus on policing the trustworthiness of platforms and the authenticity of their own internal reputation systems?

http://www.cdixon.org chris dixon

in theory, yes

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Chris Dixon