Friday, October 24, 2014

From the Friedberg Economics Institute Fellows Program, 2014 - 1

Peter Lewin at Neve Ilan Hotel
October 19 at 1:54pm ·
Michael Eisenberg, seen here at tonight's gala dinner, gave the keynote to kick off the event. Guess what he talked about? The SHARING ECONOMY. Look at his bio below. He is an investor in Airbnb among other companies. His rushed away to catch a flight to NY where he will be for two days.
In his talk he unintentionally channeled my thinking about the significance of the sharing economy, except perhaps more articulately and emphatically. I said in
a post and elsewhere that I thought it was the most significant development towards free markets in a hundred years. He thinks it is the basis of a revolution that is just getting started that is as big as the Industrial Revolution. No need to quibble about who is right, it is an important transformative phenomenon.
He then went on to explain, as I have, the tremendous resistance to it and how it could be derailed through expanding government regulation protecting vested interests - the taxis, hotels, freight shippers, etc. But he added significantly that, since this is a global phenomenon, it cannot be blocked worldwide and those economies that do not make their peace with it will be left behind and will pay a higher ultimate price for the transition.
He believes that the transition will come and will be painful - that the sharing economy revolution will leave no industry untouched and that many people will be rendered economically obsolete - many more than the expanding companies can absorb. He called for corporate philanthropy and individual outreach to promote retraining, etc.
This is where I would venture to disagree. There is no way he can know this - though his hyperactive, charismatic, personality might make him think he should and does. My own suspicion is that, with minimal intrusion, the market process would adjust much more quickly and rapidly than we might expect. I intend to address this in my two lectures, touching on Hayek, spontaneous order and the propensity to innovate in crises.
One of his conclusions I do believe we cannot escape - all change is painful for some and large changes are painful, sometimes devastating, for many. There will be pain. The only question is when and how much - if we try to regulate it away it will come later and it will be more.
This is what makes the case for free markets in the face of this phenomenon so difficult to sell. That is why I am here.
Michael Eisenberg is a Partner at Aleph, a $140MM early stage venture capital fund, which he co-founded with Eden Shochat in 2013. Michael joined Benchmark Capital as a general partner in July 2005 and continues as the partner responsible for Benchmark’s Israeli portfolio. Michael joined Benchmark from Israel Seed Partners where he was a general partner from 1997. Eisenberg began his career at Jerusalem Global where he started and led the firm’s successful investment banking group and partnership with Montgomery Securities. Michael has focused on Internet investments since 1995 and has invested in and sat on the board of Israel’s leading companies and start ups, such as (Nasdaq SHOP, acquired by EBAY), Conduit, SeekingAlpha, Gigya, WeWork, Wix, (Nasdaq ANSW), Tradeum (acquired: VERT), and Picturevison (acquired: EK).

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