How To Spot a Breakthrough: Tips from Early Amazon Investor Nick Hanauer
xconomy.com
xconomy.com
For example, I think that YouTube is easily a 10x improvement over things like VHS tapes. I was just hunting for the opening credits of children's shows that I watched as a kid, and I found every single one (except Voyage of the Mimi ;-)) in about 15 seconds. My dad has been searching for the songs he grew up with, in the 40s, and they're all there. It's like a vast nostalgia library.
But that didn't exist until enough people started using YouTube that basically everything became available online. When I first saw YouTube, around the fall of 2005, I was basically like "What's the point?" You were limited to 10 minute clips, and it didn't have anything I wanted on it. Even when Google acquired them for $1.6B, many people say they overpaid. Heck, people still say they overpaid.
And Google Video, which came out before YouTube and offered a very similar feature set, never really caught on. Nor did the zillion other video-sharing startups.
Ideas? My cofounder once talked with Clayton Christiansen about this (who's done a lot of work on disruptive innovation), and he said that on a micro level, it was basically all luck. You know what doesn't work, but finding out what does is basically just a matter of trying lots and lots of ideas and letting the vast majority fail.
I've noticed that whenever Google launches Google _, where _ isn't a search filter, it more often then not fails. It's the branding. I think that for a lot of people Google = web search. Google Image Search is popular because it's an easily comprehensible feature of search. Google Docs is a shit brand; if I only knew about Google search and Gmail, I'd guess it's document(ation) search. Or just a word processor. It's not immediately clear that it's a web-based office suite.
A large part of Gmail's success was in creating a distinct brand; my hunch is that if it was launched as just Google Mail, it wouldn't have been nearly as successful (technical merits aside).
This isn't specific to YouTube. I use Google to find anything on any site - very few sites can find pages better, even with advanced search features.
YouTube is sort of a special case, in that it has obvious network effects, and pretty much anyone that corners the market has a lock. eBay, Amazon, delicious, etc.
We continue to be surprised by the network effect. So perhaps the interesting question when you find yourself asking "so what?" is "does this have critical mass and a network effect in play?"
Go read Wealth of Networks. ;-)
1.) If it's already apparent that this is a viable business, then there's probably already an entrenched player, and the network effect serves to keep you out.
2.) If it's not already apparent that this is a viable business, then prospective users are like "Why should I bother?" and you never get the initial critical mass. After all, if the utility of the service grows with the square of the number of people, then the utility for the first person is zero and they have no reason to begin using the service.
It seems that most firms that overcame the initial network effect did so through a combination of blind luck or leveraging other assets. For example, YouTube's traffic hovered around zero until they got SlashDotted. EBay was blind luck - Pierre Omidyar figured he'd run an experiment on creating the perfect marketplace, and it turned out people sent him money. Digg used Kevin Rose's TechTV audience to seed the initial site. FictionAlley had the most popular HP fanfiction author as one of its founders, and she pulled her fanfiction off all other sites and hosted it exclusively on FictionAlley. Microsoft lucked out on the IBM deal and then leveraged that to gradually increase their monopoly over the PC industry.
Think of something that work win if it had a network. Think of a way to seed the network. FTW.
It's easy to see these in retrospect, things like spreadsheet software, digital photography, digital publishing, and email are all a factor or 1000 or more better in some regard than what came before. Hanauer mentions getting "1,000 times the surveillance per dollar".
In Founders At Work the guy behind PayPal describes their fraud tools which were probably 100 to 1000 times better than what their fraud investigators were working with and allowed PayPal to survive when their competitors died.
I've been in academia for a long time so I often wonder how to make education 1000 times better. If that 1000 times better is 10 times faster and 100 times cheaper (questionable math I know) you'd be able to do college in 5 months for a few hundred dollars. I don't know how to do it, but it forces a different thought process.
It's relatively easy to make something 1000 times better that is only useful for one or two people in a particular situation, and the more people it is useful for the more money potential there is. A simple script has been 100 to 1000 times more efficient for me in some situations, but isn't useful for anyone else. 1000 times makes such a difference though that it is almost always worthwhile.
The school decided to let me have a chance at taking a few versions of the year's final. I took about 5 hrs 1-on-1 tuition with approximately 1.5 hrs preparation each + about 10 hrs of self study + about the normal amount of pre test practice (maybe 20-30) hrs. That adds up to approximately 45 hrs all up compared to maybe 5-6 times that much pursuing the normal study path. I had similar examples at university (though not as sharp).
Assuming that 5 hrs 1-on-1 is probably cheaper the 1/30 X 1 year of teacher time, that's an efficiency. But you could probably have 7-8 hours of 3-on-1 with similar results. 1 teacher could potentially "teach" 10-15 students how to pass that test in a week.
Of course there what you have is a totally different experience. I was taught how to pass the mathematics test, not mathematics. My classmates were taught mathematics, but they still learned how to pass the test.
Universities have terrible inefficiencies. They basically subsidise research with tuition. The students receive some of the prestige gained via research in the form of their degree. But if you look at it from a purely educational perspective, it's inefficient.
In many subject areas attendance in lectures was about 40%. My own attendance was in no way linked to my results. What I did find important were the tutorials. But that was only about 100 hrs per year (10 - 15 students). Everything else, from lectures to course administration is very scalable.
I could have received a very similar education with 10 hrs per student tutorial time if the structure was behind it.
But if I had to place a bet on what the future disruptive innovation would be I'd say it won't be the same thing just more efficient. I think there is a lot of potential in separating education from certification.
The knowledge is accessible online for the most part. It still needs to be arranged. But that will almost certainly occur if certification exists separately to education.
I also think/hope that it will occur in the developing world. Employment is becoming accessible via the web already so the motivation is there. Knowledge is already there. I don't think that a situation where $1000 in hardware & internet access can take someone from a year 9 education to paraprofessional or professional level of education.
There is a huge amount for the world to gain. The biggest economic inefficiencies are barriers to trade, barriers to investment & barriers to immigration. Trade barriers & investment barriers can (& have) been lowered to allow the flow of capital, technology, products & services but not labour. Education is part of that.
5.99999993 times greater in fact.
If lottery tickers were free then you'd get as many as you could.
Those that believe that luck has "nothing to do with it" are generally endowed with a huge ego and no way to see around it. Strangely, they're also the ones most likely to blame bad luck when things go wrong: internalize success, externalize failure.
The advantage to internalizing failure is that you can learn from it.
This is not to say one should have an inflated sense of value or "don't learn from your mistakes", but it is much healthier to optimistically look at failure as not a personal thing, but something external.
People who have succeeded and are confident in themselves are never afraid to look back and admit that a little bit of luck (and opportunity) was part of the equation. But by no means will they discredit their own personal influence and attribute the entire success to something external.
The only problem is the measuring stick always keeps growing taller. So what is "success" to that specific individual when they can't enjoy it or even recognize it as "good enough"? Others will tell them they're an amazing success, but they'll never believe it was enough of a success. That definition of being more successful is based on the others' perception.
Not only that, but you'll notice the study did not say internalizing success means you'll be less successful. It's possible to be content by valuing yourself in foundational principles like "hard work, integrity" etc. and through that achieve both success and happiness.
I'd be interested to see that psych study, but it does seem pretty common sense, though. The more you value an outcome in life the more you'll spend your life chasing it - and the higher probability you'll reach it.
If you fail and learn not to do some of the things that led to the failure, there are likely still many more things you have yet to learn that may lead you to fail in the future (assuming you don't repeat your mistakes). On the other hand, if you succeed and learn from it, then you can apply some of the things that contributed to your success to future endeavors.
I'd argue that this may be one reason you see so many serial entrepreneurs... reflecting on what contributed most to their successes allows them to achieve similar successes over and over.
I'm not suggesting learning from your failures isn't valuable... it absolutely is. I'm simply suggesting that learning from your successes may be more valuable.
Here in Canada everyone gets free health care, and Scandinavian countries are even more progressive than we are. Residents in some Scandinavian countries attend university for free. Free university and health-club-style medical for everyone!