A noteworthy absentee is banking. In many countries, banks would be dead (investment and retail banks) if not for government intervention. Such a pity that heavy regulation which is designed to prevent fraud and so on, kills off the chance of startups coming in under the radar and destroying the incumbents margins by using technology to outmaneuver them.

E-trade managed to do it for buy and selling stocks, but that's just one slice of the financial services industry. BankSimple are kind of doing it (coming in under the radar) but even they must use external banks to hold customers deposits in. Financial services make around one-third[1] of all US corporate profits. Regulation aside, this is a sector begging for innovation (the kind the makes the industry more efficient, not the kind of "innovation" that creates toxic products that go boom.)

[1] http://blogs.wsj.com/economics/2011/03/25/like-the-phoenix-u...

Slightly older article:

http://www.theatlantic.com/magazine/archive/2009/05/the-quie...

I think both bookstores and record stores have a chance to go back to what they once were. Small and independently run, selling things their customers actually want, not everything under the sun.

I agree with that statement generally.

One (sort of) case in point is American Apparel. While they are now in deep shit (nearly going to bankruptcy but just got rescued), they were doing pretty well for a few years as a vertically integrated apparel maker, with a factory in downtown LA.

Hard to think of other examples.