LinkedIn founder Reid Hoffman’s 10 rules of entrepreneurship
venturebeat.com
venturebeat.com
"As one rule-of-thumb on how to judge whether your idea is disruptive enough, Hoffman said it should take $10 revenue and replace it with$1 of revenue, because that’s creating opportunities for new ecosystems."
Anyone have any good examples of this in action?
One example is the whole "long-distance plans" business of telephone carriers. Once skype and other voip companies made it essentially free to call long distance - that whole business of charging exorbitantly for long distance for landlines disappeared.
Basically if a business exists because its able to charge 10x for a service and if you can start charging 1x for the same service, then the previous business will not be able to survive in its present state as, usually, it only knows how to make a profit on a price of 10x. Any less and its facing huge losses.
He explains the idea of disruptive innovation through a series of examples.
A great example is CDs vs MP3s. A cd cost about $10. It was replaced with something that cost $1 - spawning new ecosystems.
It is: "The laws of entrepreneurship are not laws of nature. You can break them."
I'm sure there are great examples of companies that were/are disrupting their markets through creating entirely new opportunities in the market, and charging for those.
unfortunately, I'm stuck thinking of examples. Anybody have any good ones?