Friday, March 8, 2013

Wait... There's a Genie in my Economy!

What do the following have in common?
  • International Paper
  • United Airlines
  • Google
  • Facebook
  • Twitter
  • Amazon EC2
  • Kickstarter
  • 3D Printing
  • Genies

More specifically, they each help to reduce the friction between all of the things that must be in place to get something that you want.
  • International Paper - What does it take to get the paper in your printer? 
    • Rights to log trees. The labor to log them. The tools to cut down a tree. The knowledge to use those tools. The transports to move the trees. The machines to pulp the tree. The labor and knowledge to use the pulping equipment. The chemicals to process the pulp into paper... you get the idea...
  • United Airlines - What does it take to move yourself to Japan?
    • The money to buy an airplane. The knowledge to fly it. The contacts required and hours spent to negotiate the rights to take off from SFO and land at NRT. The labor and knowledge to service the aircraft... etc...
  • Google - What does it take to find out about everything on the internet?
    • The knowledge to create an algorithm that is helpful at finding what you want amid tons of stuff you don't. The programming skills to implement it. The knowledge to build the IT infrastructure to process and store all of the data required to run the algorithm. The servers and real-estate required to hold the servers... how easy would those be to get on your own?
  • Facebook - What does it take to find all of your long lost high school friends?
    • The hours and hours of phone calls to numbers in your old day runner (they still make these?) hoping that their parents still remember you and still live there. Or trawling through phone directories looking for the right Joe Smith... ugh...
    • OR build your own content site which will attract half of the planet AND get them to list their high school... pretty simple...
The remaining companies or topics flip the equation a bit as they are more general tools for reducing friction towards the end of doing something else.
  • Twitter - How could I publish my thoughts to "everyone" at a reasonable cost?
    • I could never mail a letter, call by phone or place enough radio and TV ads to do this. What would it cost to generate the lead list and qualify the leads to do this in a more focused way?
  • Amazon EC2 - How do I start a s/w business that scales without major capital outlays?
    • How else can I get enough computers to scale my SaaS business to profitability without the friction of convincing someone to front a significant amount of money to purchase and administer a server farm?
  • Kickstarter - How do I find funding to raise capital to do something people want to see done?
    • Am I lucky enough to be born rich? Did I get lucky enough to know powerful, rich people? Am I a good enough social engineer to find these people? Do know the right VCs? Is my product profitable enough to a VC for them to consider? What would it cost to build the audience of millions who are engaged enough to put money on the table - sight unseen?
  • 3D Printing - How do I make a complicated, custom physical part in low volume (qty 1)?
    • The money and space to buy a CNC machine plus the experience and knowledge to operate it? Or the hours spent to find a machine shop that will do a low volume run, now, for a reasonable price?
  • Genies - How do I do anything with anyone, anywhere at any time?
    • You have 3 wishes...
The interesting thing about removing the friction around doing "something else" is that it enables new ways for people to do things for themselves and, ultimately, find others who might want those things. Which they then might trade something for (like money). Which sounds sort of like an economy.
Take that to its logical conclusion where friction is, genie-like, reduced to near zero between all people and the resources / skills they hold and what is the purpose of a corporation as we know it today? We could do anything for ourselves by finding and coordinating the right people.

Maybe this does not happen in my lifetime, but the idea of friction seems like a powerful filter for looking at the value of any product or service that you are trying to create today. If it is not reducing friction then you're heading the wrong way.


Thanks to Gabe Newell for throwing the lightning bolt which fused the 10,000 threads in my brain into a coherent idea.

Take a look at this talk if you have an hour to spare.
Why is Valve structured as it is?
What is the purpose of a corporation in recent history and today?

Good stuff.