The Pros and Cons of Our “Middleman Economy”

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Harvard Business Review

Leadership, Entrepreneurship, Communication, Marketing, Business, Business/management, Management, Business/marketing, Business/entrepreneurship, Innovation, Hbr, Strategy, Economics, Finance, Teams, Harvard

4.4 • 1.9K Ratings

🗓️ 7 June 2022

⏱️ 23 minutes

🔗️ Recording | iTunes | RSS

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Summary

Kathryn Judge, a finance professor at Columbia Law School, is troubled by the rise of intermediary platforms between products and services and the customers who eventually purchase them. Thanks to technology and globalization, she shows how the importance of “middlemen” in the value chain has increased, along with the length of global supply chains. Judge details the downsides and risks of this trend. And she explains how customers and workers alike can lead to intermediaries offering more transparency and social value. Judge wrote the book "Direct: The Rise of the Middleman Economy and the Power of Going to the Source.”

Transcript

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0:00.0	So you got the job. Now what? Join me, Eleni Mata, on HBR's new original podcast, New
0:08.1	Here, the Young Professionals Guide to Work, and how to make it work for you. Listen for
0:13.8	free wherever you get your podcasts. Just search New Here. See you there!
0:30.0	Welcome to the HBR IDA cast from Harvard Business Review. I'm Kurt Nickish.
0:48.4	A great deal of what's possible in our modern economy is thanks to middleman.
0:54.2	There why you can easily buy something designed in Europe and made in China.
0:59.2	You can search homes for sale and apply for a mortgage without ever getting off your couch.
1:04.2	The prices and mind-boggling access of goods that come via middleman are hard for customers to
1:10.8	resist. They're invaluable connectors in a global and complex economy. That also gives them
1:17.2	outsized power. Today's guest has written a thorough critique of what she calls the middleman
1:23.2	economy. Catherine Judge is a finance expert and professor at Columbia Law School. She's here to
1:29.2	talk us through her argument and to give some advice for how to navigate this economy as consumers
1:34.8	and businesses. Her book is Direct, the rise of the middleman economy and the power of going to
1:41.0	the source, and she joins me now. Hi, Kate. Hi, Kurt. Thank you for having me.
1:53.6	So let's start with that phrase that we've all heard to cut out the middleman.
1:58.5	So when you cut out the middleman, you save some money by going directly to the source,
2:03.4	and you're fine with that because that middleman wasn't really doing anything for you anyway.
2:07.8	But I think that the intermediaries that you describe in your book are companies that we use a lot,
2:12.8	like online retailers, big box retailers, that actually provide consumers a lot of value.
2:18.8	They're offering really handy services to consumers. Can you break down your definition of
2:24.0	middleman? Like what intermediaries are you thinking of here? Yeah, right at the beginning,
2:30.2	it's important to distinguish between middleman and the middleman economy. So middleman are
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