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| | Enhance the intimacy of each transaction for additional mutual benefit. |
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| | Create partnerships to combine competencies and information in ways that were not previously cost effective in order to add more value to each transaction.
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| | Wit Capital
(p. 134). Andrew Klein, owner of microbrewery
Spring Street Brewery, conducted the first IPO over the Internet, raising $1.6 million in stock from 3,500 investors without having to use relatively expensive Wall Street intermediaries. With permission from the Securities Exchange Commission, Klein launched Wit Capital in late 1997, an on-line investment service that will replicate the Spring Street experiment for any company-or private investor-that wants to avoid going through the traditional channels in the securities market. Exploiting the dramatically lower transaction costs of cyberspace, Wit Capital and other Internet-based services are making it possible for complete strangers to form partnerships and finance new ventures. |
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| | AOL's Motley Fool (pp. 134-135) investment service claims it's been able to consistently beat the market by relying on independent parties who collaboratively exchange valuable information, and make informed trading decisions based on the "sum of its parts." Here's how it works: one participant notices low inventory for disk drives at the local electronics store; another drives by the manufacturing plant late at night and sees a filled parking lot; a third read between the lines of a press release. Combined, this information suggests an unexpected demand for product, and the investors predict correctly a big run-up for the stock. Partners in this venture do business with each other based strictly on the value of their information, without lawyers, contracts, or articles of incorporation. In cyberspace, it's not who you know, but what.
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| | Other company examples: Microsoft (pp. 135-136), General Magic (pp. 136-137). |