Business Model Scalability

Nicholas Carr writes about companies Google, eBay and Dell who ‘want to have it all.’

these companies have a faith in the “scalability” of their “business model.” It used to be you’d beat your competitors by achieving greater scale in your operations, enabling you to spread your costs over more products and thus push down the cost of producing each product. Scale was tangible, a manifestation of plant and equipment and other real assets. Today, you strive to beat your competitors by creating an idea or a model that can scale without constraint, expanding easily and flexibly to handle ever more business. Scalability is intangible.

Wireless as New China

Richard Siklos writes in the New York Times: “In some ways, wireless is the new China. Both are huge, largely untapped markets for news and entertainment media companies. And media executives have made a lot of dreamy statements about both of these markets and funneled a lot of effort into them. Yet neither has yet translated into a significant new businesses for established companies, which are feverishly seeking ways to grow in a world of technological and competitive obstacles.”

Box.Net: Online Storage

Paul Stamatiou writes:

School work, business proposals, universally accessible storage, data backup, important documents – there are many reasons why you might want to have secure online storage. Having all of your important files online is more convenient and safer than toting around a USB memory stick. A relatively new and revamped web service called Box.net plans to make online storage as easy as possible without skimping on the features. With 1GB of storage for free and up to 5GBs for a small fee, you can easily safekeep files and share them with contacts.

Online storage is a volatile industry. Server space is at a premium these days. The only way Gmail is even able to cope with their outrageous offerings and large user base is by compressing their data. Assuming each person uses their ~2.5gigs of storage (not that anyone ever uses the entire thing, attachment size is limited to 10MB) with text, Google can compress that space to only a few hundred megabytes. However, with Box.net users are encouraged to store all types of data and media. Nothing will be compressed and that is a secret to why the service is so fast. New users can get 1GB of box space for free with paying users getting 5GB for $4.99 a month.

TECH TALK: The Value of Vision: Envisioning the Future

One of the qualities that an entrepreneur must have is the ability to envision the future. Vision might seem a lofty goal compared with the hard (and sometimes, harsh) realities of running a business. But without vision, navigation and decision-making becomes difficult. Vision helps simplify decision-making and an entrepreneur has to get hundreds of decisions right to have hopes of being successful. Without a view of the big picture, making even a small decision can appear to be a mountain to be climbed.

I have attached a lot of value to vision in my career as an entrepreneur. Sometimes, one gets it right. At other times, I have been plain wrong or a little early. I feel very uncomfortable without a long-term view of where the world is headed and how the things we are doing will make a big difference. I like to think of vision as a game-changer one which sets us apart from others because it gives me a clearer perspective on tomorrows world. There is no single view of the future. What I endeavour to do as an entrepreneur is to define a view of the future and work to make that a reality before others.

It is easy to underestimate the importance of vision. When one is faced with the nitty-gritty of making daily decisions to ensure that cash comes in quickly, the short-term gains precedence over the long-term. Even vision is set aside to focus solely on execution. But the question is whether one is running the right race. To build a vision of the future requires a lot of time and effort, and this can have an impact on the near-term. Successful entrepreneurs are those that can strike a balance between both, combining vision and execution.

So, what is vision? To me, vision is painting a picture of tomorrows world. It is about imagining a day in the life of your user with the products and services that you are making, and keeping in mind the changing competitive landscape. It is about thinking through pain points and crafting breakthrough solutions. It is about giving users an experience they may not even be asking for today. To build a vision of the future, one needs to come at it from multiple dimensions because technology and competition do not stand still.

Why is vision so important? For an early-stage company, one cannot compete and win the near-term battles, however well one executes. Others have a far better entrenched position. The entrepreneur needs to look beyond to the next cycle of disruptions that will come and build a vision around those. That is the time of dramatic upheaval and opportunities. The entrepreneur needs to prepare for that. It may take time for these opportunities to manifest. The enterprise needs enough cash and patience for the intervening years. It is not easy because todays pressures and deadlines will tend to take precedence. Entrepreneurs have to make sure vision is not sacrificed at the altar of the present.

Tomorrow: Mental Models