To Reality And Beyond
A look at the relationships between consumer products and their ability to grow. Where these relationships came from, where they are today, and where they’re going next.
Let the commerce commence
Since the beginning of commerce, the most powerful factor you could use to sell your offering was the price of your offering. Price was first represented by the amount of goods or services traded. Price was then represented by pieces of currency. Price would later be represented by “dolla-dolla bills”.
Who cares where commerce came from? Not many people. But it’s important to understand in order to see where commerce went.
By the early 20th century, retail commerce as we know it had sprouted throughout the U.S. and much of the world. Competition between products thickened. This competition drove companies to make their products attract attention from consumers. Entire industries were created because of this need of differentiation; industrial design allowed you to make your product better and more attractive. Creative advertising was born, to carefully craft the messaging of what you’re selling.
Still, no contributing factor of differentiation was quite as effective in attracting consumers as price, and the lowering of that price.
This seems simple, but these price lowering tactics, now in a connected world, have gained unprecedented power at a massive scale. In fact, this simple factor would make Walmart the world’s largest company by revenue today. They became the golden-child of modern commerce as we know it. A game of precise logistics and carefully balancing the lowest possible prices while still allowing a business to operate profitably.
These 2 points in commerce are represented on the graph below:
Yeah, no secret here. The lower your price, the higher your growth ceiling can be. Checks out.
It wasn’t until the wide use and trust in the internet, that we ever thought commerce could change again. I think this is widely because we didn’t think of things on the internet as “products” yet. We just thought they were things on the internet.
Little did we know, not only were things like Facebook, Twitter, Google, and Instagram all products, but they would be some of the most ubiquitous and profitable products to date.
Why are they important for our discussion? Their price.
For the first time ever you could have a product that was entirely free to the consumer.
Free products, even in the form of software, broke through the barrier of what we thought commerce was capable of. The growth of these products would hit previously unfathomable heights.
Walmart may have millions of potential customers, but free products would finally serve in the billions and do it instantly, shattering the previous growth ceiling.
The Facebook story has been told countless times so I won’t smoke that in here. Facebook, by definition, is a tool for interpersonal connectivity. In a product sense, however, Facebook is a tool that is useful and that is free.
So it stops here, right? Surely you can’t make something better than free. Free-er than free? I don’t think so, mister. Cut to: the present.
Going Beyond Free
Free products on the internet began a new type of logistics. Carefully balancing the integrity of their free product while looking for ways to monetize their users. It became particularly tricky to monetize a free product but they got creative. Today they’re profitable by wearing the cloak of a social platform, while underneath, functioning as advertising platforms. Not a glamorous solution, but it has worked so far.
During this boom of growth of free things coming to billions, while many others were focusing on the same type of careful logistical structure, another type of product was being conceived. Garrett and Travis were making an app called UberCab. Brian, Joe, and Nathan were making a website called AirBed and Breakfast.
Rather than create something free and later find ways to make money, these folks did something new and risky. They set up a marketplace of supply and demand with a special ingredient. They were going to use normal people to work (drive/host) and share their revenues with them. This, I believe, is the single most important piece of either of these mammoth companies. The employing of people with part-time income for fulfilling the demand of their respective marketplaces.
Q: What would Uber be without normal people being paid to drive folks around?
A: A $1 billion dollar taxi app. Certainly not a [whatever scores of billions] dollar app they are currently valued at.
One more for good measure:
Q: What would Airbnb be without normal people being paid to host folks around the world?
A: A strange hotel service. Or, what’s more likely, they would have never existed.
These ended up being some of the fastest, most widely adopted products of our time. They even got their own category of growth and size; Unicorns. These two are also unique in that they’re the only Unicorns to survive the mass extinction of VC-bloated company markdowns we see today. They were the first to break through and make the leap, flexing the power of paying people to grow their userbase to new heights.
Needless to say, this put a profound 4th dot on our graph:
That’s right. That same damn line kept going down. Past free and into a new realm of marketplace.
One that pays people.
Next Stop: Beyond reality
It’s easy to stop there. But let’s go into the future. Uber and Airbnb already exist. What will we make next that will be bigger than our modern-day Unicorns? I’ll tell you.
Let’s break down what happens in an Uber transaction, for example. You request a ride to go to another location on the planet. When you make this request, an expensive automobile made of forged metal and plastic, weighing over a ton, controlling a series of explosions inside an internal combustion engine, is navigated by a human to your geographical location. It then drives at high speeds on dangerous roadways to take you to the drop-off location of your choice.
This is messy as hell. Now let’s think about how much can go wrong in this process and how old the pieces to this puzzle are. We’ve already seen flaws in it, left and right. Assaults between drivers and passengers, car accidents, drivers assembling politically, laws from states or other countries banning Uber, you name it. Yet they are still the fastest growing company in history.
Their biggest flaw is that they require a lot of the real, physical, slow world in order to facilitate a transaction. What would be better is if you could make a marketplace that wasn’t slowed down by the old world…
One that used the internet instead.
No physical interactions, no physical materials, no physical traveling, no engines or danger or human error.
The hidden truth is that it’s totally possible to build something like this. Something larger and stronger than Uber. You just have to harness the virtual world and the speed that comes with it, in a marketplace that pays people.
This is our projection of where the next companies with unprecedented growth abilities will be. Not only companies that pay people for work, but companies that pay people for work that can be done virtually:
“That’s us!” isn’t entirely accurate anymore. Busy didn’t work out BUT, I encourage others to BUILD IN THIS SPACE. The time is now.
If our theories are correct, this is the spot to be. This is the place where the next mammoth companies will derive. Breakout companies in this space will dwarf Uber and Airbnb. Not products that rely on the real world, but products that make the real world easier by providing virtual work.
Building for a need rather than a want.
A product in the space of paying people will always have greater firepower than a free product. As useful as some free tools may be, they are still things that people might want. However, money is something that we know all people do need.
Want markets are measured in billions.
Need markets are measured in trillions.
Not only are need markets superior, but it just so happens that the need market of labor is in big trouble. In a rocky world economy and as we see our traditional jobs being replaced by automation and AI, there is no better time to fill the gap that the future will undoubtedly create.
The future perfect
Imagine the world of the future. Imagine needing money, using software for a few minutes from anywhere in the world, and earning money instantly. That’s it. The rest of your time is spent doing whatever you want.
No more spending your life working with a pinch of living sprinkled in. Giving people easier ways to make money is giving people more control of their life, and that’s the future I want.
This the epitome of using technology to make our lives better. This is why we’re here. This is the future we’re going to make.
Thank you for your time. This post was originally written in tandem with a launch post about Busy, a company I was building where you could make money from your phone. We’ve since closed shop but we learned a lot about this space and I figured it would be good to get some ideas out there.