If you’re a PowerSeller on eBay, or a real-estate agent showing houses to your client, or a sales rep in any field (as more than two million Americans are), you’re not just pushing products. If you’re worth your salt, you’re a Certifier, staking your reputation on the quality of the goods you represent. Far from killing the middleman, the Internet has generated a thriving new breed. Between 1999 and 2010, just as the Internet was transforming the world, middlemen’s contribution to the United States’ GDP has actually grown—from a quarter to more than a third of our economy. In The Middleman Economy, Silicon Valley-based reporter Marina Krakovsky elucidates the six essential roles that middlemen play.
“Like many people, you may be a middleman without even realizing it. Marina Krakovsky explains how the best make themselves indispensable: as a merchant of information, she has gone far and wide to bring you the goods.” —Jonathan Rosenberg, Senior Vice President at Google and co-author of How Google Works
“We often think of a middleman as someone to avoid—the person who stands in the way, or does nothing at all. But the truth is that the person in the middle, whether it’s a venture capitalist or a real estate broker, can create great value: and the best middlemen are true partners who make you a lot of money. The Middleman Economy shows you how.” —Barbara Corcoran, Founder, The Corcoran Group
“In The Middleman Economy, Krakovsky has crafted a powerfully persuasive counterpoint to the notion that in today’s society, middlemen are obsolete. Her captivating and well-researched narrative will convince you of just the opposite—that middlemen are even more critical to today’s economic and social order, whether they function as Bridges, Enforcers, Certifiers, Risk Bearers, Concierges, or Insulators. And they…are us.” —Margaret A. Neale, Professor of Management at the Stanford Graduate School of Business and co-author of Getting (More of) What You Want
“Although technology has brought us to a more interconnected world, Marina Krakovsky, with captivating examples, brilliantly describes the irreplaceable role of the middleman in a successful economy.” —Bill Draper, General Partner of Draper Richards L.P., and author of The Startup Game
“Krakovsky reveals a riveting truth: we are all middlemen. Her captivating examples and precise typology capture the vast reach and diversity of middlemen in every aspect of our lives. But most importantly, The Middleman Economy provides the necessary tools to avoid predators and parasites and find the partners that will lubricate and accelerate our success in life.” —Adam Galinsky, Professor of Business at Columbia Business School and co-author of Friend & Foe
“With sound reasoning and hard evidence, Krakovsky exploded my belief that the rise of the Internet spells the demise of the intermediary. In the process, she’s provided me, and all of us, a great service.” —Robert B. Cialdini, Professor Emeritus of Psychology and Marketing at Arizona State University, bestselling author, Influence: The Psychology of Persuasion
Marina Krakovsky writes about ideas in the social sciences, particularly new research in psychology, sociology, and economics. Her work has appeared in Discover, the New York Times Magazine, Scientific American and Scientific American Mind, O, The Oprah Magazine, Psychology Today, Slate, Stanford Magazine, the Washington Post, Wired, and other publications.
She is the author of The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit (Palgrave Macmillan, 2015).
She and economist Kay-Yut Chen are co-authors of Secrets of the Moneylab: How Behavioral Economics Can Improve Your Business (Portfolio/Penguin, 2010).
Marina graduated from Stanford University with a degree in English and lives in the San Francisco Bay Area.
I found the book to be very interesting for me, as I'm vastly playing the middleman role in my daily job. With a lot of notes, I'll definitely be coming back from time to time to it.
This book takes a deep look into the value that middleman provide. To be useful, middleman must provide value to both the sellers and the buyers in the exchange. Thing is, middleman need to sustain their trade as well, that means taking a share of the profit from the exchange. When middleman do their job right, they provide more value than their expense, benefiting all those involved. The bad reputation of middleman comes about when they cost more than the value they provide. Krakovsky provides six different ways that middleman can provide value when they act as the Bridge, Certifier, Enforces, Risk Bearer, Concierge, and Insulator. The six value providing activities are not mutually exclusive. Each is needed and sometimes required in many different situations. Each has the power to provide massive value to society. Each role increases efficiency by allowing for less idle capacity, reducing time spend, or reducing stress for either party. But should the middleman take more profit than the value the service provides, it will be easy to cut the middleman out of the exchange. Being the bridge means reducing the transaction costs between people. Many markets were not sustainable due to high costs, the middleman can bridge the gap by reducing those costs. The certifier helps by sorting through information and providing the appropriate value to the information. Without expertise, it is difficult to discern the value of information, while the certifier has the expertise to know the proper value. Enforces make sure that all parties to an exchange play by the rules. By punishing those that break the rules, the enforcer can make certain that foul play is not costless. The risk bearer can handle the risky side of the business more than any individual can. Having the ability to diversify revenue streams, the risk bearer can survive when losing money from some sources due to profits from others. A concierge can tailor information to best fit the client. Having access to the same information does not mean the same value can be extracted by different people, the concierge listens to the client and helps them find the appropriate thing for them. The insulator takes away the pressure of being seen inappropriate. Representing oneself has different social connotation then representing someone else, the insulator levels the power relationship between the parties without damaging either parties’ reputation. The focus of the book is when the middleman provides more value than the expense, while sparse information in given to why some middleman fail. In the introductory chapter, the author provides the potential view of middleman that depend on their ability to get things done to the value they extract. The major problem is the insufficient explanation of why some middleman are seen in the negative relative to the values they are meant to provide. Some sporadic examples are provided when middleman is notorious for the poor job done, but they lack depth. Understanding what makes a bad middleman in detail would have helped a lot in explaining what mistakes not to make. There is a lot of value in knowing what not do to. Extremely well written and research from different fields are used such as economics, game theory, psychology, and sociology. The technical parts are fun to read. Even though examples of middleman doing a poor job are pervasive, a chapter or two on the failures of the middleman would have provided a lot of value.
A chatty and verbose book on how a middleman can add value in today's marketplace where direct matching is often possible. It broadly classifies middleman value-adds into Bridge (connects nodes in a network), Certifier (signs off things), Enforcer (referee), Risk Taker (underwrites risks), Concierge (service outsourcing), and Insulator (interface). The stories and episodes used to illustrate each category are mediocre and digressive.
The dictionary defines middleman as: "a person or company that buys goods from a producer and sells them to someone else; a person who helps two people or groups to deal with and communicate with each other when they are not able or willing to do it themselves." Being a middleman has not always been laudable, and they are often considered expendable or even worse, a greedy party who takes his cut out of the seller's or buyer's share of a financial transaction.
I was intrigued by the subtitle of this book "How Brokers, Agents, Dealers and Everyday Matchmakers Create Value and Profit". The inference is that middlemen actually play a very useful part in brokering deals and bringing parties together in ways that they couldn't do themselves, or at least not as efficiently. In the intro, the author discussed the fact that nobody likes a middleman, but most of us are middlemen. In reflection on my career in marketing and sales operations, it seems that many of the roles I fulfilled could have been labelled as middleman. Virtually every knowledge worker has aspects of middleman in their job descriptions.
The author segments the middleman role into the Bridge, the Certifier, the Enforcer, the Risk Bearer, the Concierge and the Insulator and covers each of them in a separate chapters with interesting examples. The writing is entertaining and fast-paced and not particularly academic, which of course makes it much more approachable. If you're a middleman (or think you might be), and looking to validate your existence, you'll certainly enjoy this book!