Bad Lands

Businesses that provide a platform for third party developers are directly analogous to real estate development with the platform vendor in the role of landlord. The ultimate landlords are, of course, nation states. How all that is governed is the primary turf under dispute in politics. For example in colonial Boston the state delegated to Harvard University the rights to build a bridge over the river. Running the bridge was quite profitable, and later when the state wanted to build a second bridge Harvard sued them for breach of contract. Later the state licenced a lot of toll roads and canals, which mostly turned out not to be profitable. When the private operators folded the state got left holding the bag. Historically you needed to get a license from the king to run pretty much any business. Some of these where “licenses to print money,” others less so.

Vendors Apple, Microsoft, Google, Facebook, etc. etc., like states, manage their platforms to create economic growth on the platform for all the various reasons. For example Tivo averages $8.78 per subscriber per year and one way for them to increase revenue is to raise taxes or get more customers to move onto their platform. But an example like that can be extremely misleading. The bloom of economic activity around a platform offers many options, and the king can manage those licenses in numerous ways. The traditional technique is to employ the relatives. But more profitable is to spin off private businesses to friends and family.

The European kings handing out license for regions of the new world was mixed bag for the license holders; but the US government handing out license for the cross continental railroads was a pretty good deal. The railroad barons managed to retain the rights to much of the land around the rail lines. That’s an interesting contrast to the Louisiana purchase where the Federal government believed it would recoup the cost of the purchase by selling the land, but since we already had a long tradition of taking rather than paying for land it never did.

The railroad barons (like modern platform vendors) would advertise to attract settlers (developers) to their real estate (platforms). Here’s a story:

IN THE BEGINNING, there were 10 families of Germans from Russia, who arrived in Fresno, CA on June 19, 1887.

On May 8, along with 219 other immigrants, they had left the villages of Straub and Stahl am Tarlyk, on the Wiesenseite of the Volga River, journeying westward traveling by wagon, train, and boat through Poland, East Prussia, and Brandenburg to Bremen, Germany, the port of embarkation. When they docked in New York, they intended to go to Lincoln, Nebraska.

52 days later, on June 19th, 31 of these pioneers arrived at the old Southern Pacific Railroad Depot in Fresno, California. They brought their families to this great San Joaquin Valley to seek a better life for themselves and scouting for other families in their home villages in Russia.

According to Alex C. Nilmeier, of Fresno, his grandfather Philip Nilmeier had become acquainted with a Jewish salesman on board ship. He was a man of the world who believed the San Joaquin Valley had great potential as an agricultural area. Philip Nilmeier was able to convince ten families to change their destination from Lincoln, NE to Fresno. In 1919, he said that certain articles in a little booklet, setting forth the attractions of Fresno County, for working people, also induced him to break away from the homeland.

That worked out! But golly, think about the risk these folks were taking. All on the basis of a little booklet.  The visitor center of a national park I once visited had a picture taken about that time showing a barren landscape spotted with occasional hovels, in the foreground a family stood in front of theirs. The caption informed us that these were sod houses, since there was no other building material and that everybody died that winter.  I doubt their little booklet used the modern name for that park The Badlands. A tremendous load of Survivor Bias is built into the stores that get told about all these platforms.

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