Category Archives: Old School Industries

The Threat and Opportunity in Transparency

Low prices are very important, but they are not the only thing.

Consumers also gravitate toward value and fairness, even if its at a higher cost. See Uber for example.  The relative importance of price, of course, differs by customers, but this is generally speaking.

One way of looking at the Internet is transparency into whether a business is adding value.  Where it is (and it produces value and it is fair), customers are willing to pay up.  Where it is not, customers rebel and the Internet helps them do so.  This framework resonates in Marc Andreesen’s comment from his interview with Andy Server below:

Jeff Bezos has this line where he says there’s really two kinds of businesses in the world: those that try to charge consumers more, and those that try to charge consumers less, or try to save consumers money. I think about that more broadly. I reframe it as: There are businesses that have the mentality of adding value, and businesses that have the mentality of extracting value. And the Internet, I think, is an enormous benefit to the model of adding value, and it’s an enormous danger to the model of extracting value.

I think you see that across the economy today. The music industry is a classic case in point. The whole piracy boom of music on the Internet really arose when music buyers essentially rose up in protest and said, “I want one song. Why am I being forced to pay $16 for the entire CD when all I want is one song that I can listen to online.” That’s when you had an earthquake hit the music industry. It was when consumers viewed the pricing to be fundamentally unfair.

Car dealers are going through another version of this. Carbuyers have never liked the process. Maybe a few have, but most carbuyers have not liked the process of having to go in and really get raked over the coals by a car dealer who takes advantage of the fact that consumers have no idea what the wholesale price of the car is. Now, after a little research online, you can walk in armed with a car’s complete wholesale information and get a much better deal.

In traditional business circles that kind of transparency gets viewed mostly as a threat. I think that’s unwarranted. I think the opportunities are just as large and probably larger, especially for businesses that have this view that their role in the world is to add value, is to bring consumers benefits.

Blame the Customer

In an article today, WSJ describes how Uber is killing it in black car service in New York.  In that article is a classic example of the “blame the customer” mentality that marks why those competitors are being disrupted:

Avik Kabessa, CEO of Carmel, and Tarek Mallah, general manager of Dial 7, say their businesses charge less than some of Uber’s offerings. They also question the rush to embrace a newcomer with a limited track record.

“Because of the noise that Uber knows how to create, people are missing the point that apps exist in liveries right now,” Mr. Kabessa said.

The Price of Insecurity

In the words of the Economist’s Schumpeter, this appears to be an enviable niche to occupy:

Though lesser firms may be facing disruption, McKinsey dispenses a special sort of consultorial fairy-dust that is hard to replicate, and as much in demand as ever. The global ruling class is seized with a toxic combination of status-obsession and status-insecurity. Decision-makers also fear being swept away by one of Mr Christensen’s disruptive forces. They seek constant reassurance and reaffirmation from prestigious institutions. McKinsey knows better than almost anyone how to exploit this peculiar mindset. That will guarantee the Firm a solid future, even if no one can prove that its advice actually does any good.

Primary Care: Open For Business Longer

Competition works.

Here is a great example.  In response to the spread of retail health clinics (Walgreens/CVS) and urgent care centers which provide basic services, the American Academy of Family Physicians is advising their doctors to expand their hours to see patients on weeknights and weekends.

Our pedetrician takes our cell phone calls.  Just around the corner is seeing us via FaceTime.  If not, someone else is going to come and do it.

Spectrum In the Hands of Unreasonable Men

I have written before — on this site and elsewhere — about the sorry state of mobile broadband and how it threatens our entire innovation ecosystem.

The FCC has the typical bureaucratic blindness to this, not even understanding there is an issue.

So we’re lucky that we have two of the most unreasonable entrepreneurs alive who are going to make a run at disrupting the industry’s coziness.

The WSJ today has a story about the unconventional Masayoshi Son and his desire to revitalize Sprint:

When Mr. Son announced the deal last month in Tokyo, he didn’t mince words about his ambitions: “I’m a man, and I think every man wants to be No. 1.”

That is easier said than done. Sprint is struggling with an expensive network upgrade, a $15.5 billion commitment to subsidize iPhones for customers and a heavy debt load. Sprint also is well behind the market leaders in its so-called spectrum holdings—its right to use chunks of the airwaves to transmit phone calls, Internet traffic and other data. AT&T and Verizon Wireless—a joint venture between Verizon Communications Inc.  Vodafone—have the most valuable spectrum holdings in the U.S., with more than 100 megahertz each. Sprint holds 56 megahertz, a deficit that isn’t as bad as it looks given Sprint’s lower subscriber count. The company is using funds injected by Softbank to acquire more, including a deal this month with U.S. Cellular.

Softbank’s acquisition would inject $8 billion directly into Sprint and give the carrier more flexibility to buy spectrum or acquire smaller rivals. The money also could help Sprint to continue offering plans that let subscribers use as much data as they desire for a flat rate—the kind of appealing deal for customers that AT&T and Verizon have all but dropped.

At the same time, one of this blogger’s favorites, Charlie Ergen, the satellite tv gladiator, is looking to use his spectrum to create a terrestrial wireless competitor.


Lost in Translation

At the crossroads of American discovery and foreign language documents sits a vault of money:

Common Sense Advisory, a research firm, estimates that thworldwide language-services business is worth $34 billion and it is growing fast, at about 12% a year. No firm is big enough to dominate and most are privately held. The biggest, Mission Essential Personnel, boasted revenues of $725m in 2011; TransPerfect raked in $300m. Fees from legal work can be juicy.

TransPerfect worked for both sides in the case involving Apple and Samsung. When Panasonic, a struggling Japanese electronics-maker, bought Sanyo, another one, in 2009, America’s antitrust authorities required so much documentation before approving the merger that TransPerfect hauled in $25m in fees for translating around 100m words.

Disruption Everywhere

Marc Andreessen last week, as reported by the WSJ:

“Now that we’ve wired up the world so thoroughly, we think that technology – the Internet and mobile technology – has a chance to impact a lot more fields of activity and industries than has ever been the case.”

Financial services, health care, education, certain aspects of government and law are especially “ripe for disruption”

The Chaplin of Tech

From the WSJ Innovators of the Year feature, a curious analogy for Jack Dorsey, but the “efficiency of motion” theme is a helpful way to think about untangling complex systems:

He’s considering Charlie Chaplin’s Modern Times as his next cinematic lesson. “Every little move Chaplin does, every tic,” says Dorsey, “is either to further the story or for comedic effect. There’s no wasted motion. It’s so stark and so clear. And when you focus on the details and on efficiency of motion, something really magical happens.”

With both Twitter and Square, Dorsey’s flashes of insight are by-products of a lifelong quest for simplicity and order. Dorsey yearns to create streamlined beauty out of giant ungainly systems that at first glance appear to be irredeemably chaotic. He is the Charlie Chaplin of technologists: He makes the impossible happen through efficiency of motion.

Freeing Drugs Data

On Thursday, GSK announced an effort to release to open up its clinical trial data sets to outside researchers, perhaps leading the pharma industry to join the Kaggle trend, in freeing data to get the larger community of smart people to mine innovative truths from the data.

GSK announced:

GSK is fully committed to sharing information about its clinical trials. It posts summary information about each trial it begins and shares the summary results of all of its clinical trials – whether positive or negative – on a website accessible to all. Today this website includes almost 4,500 clinical trial result summaries and receives an average of almost 10,000 visitors each month. The company has also committed to seek publication of the results of all of its clinical trials that evaluate its medicines – regardless of what the results say – to peer-reviewed scientific journals.

Expanding further on its commitments to openness and transparency, GSK also announced today that the company will create a system that will enable researchers to access the detailed anonymised patient-level data that sit behind the results of clinical trials of its approved medicines and discontinued investigational medicines. To ensure that this information will be used for valid scientific endeavour, researchers will submit requests which will be reviewed for scientific merit by an independent panel of experts and, where approved, access will be granted via a secure web site. This will enable researchers to examine the data more closely or to combine data from different studies in order to conduct further research, to learn more about how medicines work in different patient populations and to help optimise the use of medicines with the aim of improving patient care.

This initiative is a step towards the ultimate aim of the clinical research community developing a broader system where researchers will be able to access data from clinical trials conducted by different sponsors. GSK hopes the experience gained through this initiative will be of value in developing and catalysing this wider approach.

The Opportunity in the Gap Between Mobile Hardware and Software

From my first computer, a TI99/4A to the PC clones we upgraded to every couple of years, the PC has tracked my life; getting more and more powerful, useful, and desired as I have gotten older.

This year, worldwide PC sales will dip significantly on a year over year basis.

In the last 3 decades, to the extent that this dip has happened before, it has been due to a weak economy.  This time, it’s more fundamental — people are ready and comfortable in giving up their personal computers due to smartphones and tablets.  And as happened with wired telephony, many poorer citizens of the world will simply leapfrog over the personal computer going straight from no computing power to a portable device.  The industry cannot count on growth, and it is a big reason why Dell, HP, and other big PC makers have hit a pothole.

This is a significant turning point, obviously.  The PC is losing its space on our desks and in our briefcases.

Often, opportunities lie in the gap between one part of the market and another complementary part.  One of these opportunities lies in the gorge that has opened between the hardware and some common software functions.  Specifically, despite the power and convenience of portable devices for email and the Internet, there is a big gap between changes in people’s preference and their ability to competently and confidently execute certain basic functions of the PC on portable devices, in particular, the typical office suite of word processing,  spreadsheets, and presentations.  To put some meat on it, I come up with my best ideas while waltzing around town on my phone, but if I have to turn it into a formal presentation, I still frustratingly need to sit and wait for my computer to boot up.

That is just one example of the gap between the preferred hardware and the lagging user experience, but it’s a big one.  As I have blogged before, I am still surprised that so little effort and progress is being made on this problem, when history (Microsoft, for example) illustrates how much durable market power is available to the companies that work and solve this problem even half-way competently.