Category: Business

John Stewart wrote a piece called Payments Execs Already Foresee the Store Checkout Yielding to ‘Uberesque Approach’ where he identifies a number of situations where the traditional in store checkout process is disappearing.

Technology already exists that allows customers to order ahead and pay, to order while standing in the aisle in front of the merchandise, and to pay for services like car rides without an actual checkout. Now some see these processes ultimately rendering in-store checkouts obsolete.

This is an interesting take on the demise of the checkout counter. I can see this happening in situations where the customer knows what they want and there isn’t any value in standing in line to pay (Starbucks) or the transaction is essentially pre-approved via some other action (Uber).

The take and bake pizza chain Papa Murphy’s has introduced online ordering with a separate counter to pick up pre-paid internet orders. The convenience for me is fantastic, but I wonder if the overall store revenue will go down due to the lost opportunity to upsell at the time of checkout. Obviously you can do this in the mobile app – time will tell which is more effective.

I would really love to see this in my grocery store. Standing in line so the cashier can handle everything I’ve already put in my cart is something I wouldn’t miss.

I really don’t see this in markets where the final price is unknown or the customer is looking for advice/expertise. Automotive repair springs to mind as the technician needs to evaluate the vehicle and discuss with the customer what work they want done and how they will pay for it.

“Disruptive” is another one of those word that get thrown around and gets applied to everything.

Disruption theory as described originally by Clay Christensen has 3 parts:

1. Customer dependence – low end, niche market, incumbents don’t care about or don’t see. The existing solutions are overkill and too expensive for the customer.
2. Fundamentally different business model – allows you to serve the niche market profitably.
3. There is a technological accelerator (enabling technology) – allows you to serve the mainstream with the new business model.

Disruption theory describes a pathway of how a small startup can succeed against dominant incumbents. It doesn’t describe the impact to the market. Building a better mousetrap is not disruptive.

Let’s take a look at Uber.

1. Is Uber selling to a low end market that the taxi companies were unwilling to serve? Nope, the number of rides in New York has been constant before and after Uber showed up.
2. Does Uber have a fundamentally different business model? Maybe, using privately owned vehicles, but still charging per mile.
3. Is there an enabling technology? Doesn’t matter since they are not moving from an underserved niche to the mainstream.

How about Tesla?

1. Is Tesla selling to a low end market that other car makers don’t care about? Nope, this is the primary market for Mercedes, Lexus and BMW.
2. Does Tesla have a fundamentally different business model? Nope.
3. Is there an enabling technology? Doesn’t matter since they are not moving from an underserved niche to the mainstream.

A lot of this content was spurred by an interview with Michael Raynor on the A16z podcast.

You Keep Using That Word, I Do Not Think It Means What You Think It Means

The “sharing economy” it is a phrase being thrown around a lot and has a pleasant connotation – after all didn’t your mom tell your that sharing is nice?

But what is it really? Say I need to get downtown for a meeting. In the old days I might call you up and ask for a ride or you might loan me the car for a couple of hours. But only if it didn’t conflict with your need for the car.

Enter Uber. Uber is a car “sharing” service. You create an account with Uber, then when you need a ride somewhere you use the app to request a ride. Someone then shows up and drives you to your destination – for a price.

The last time I checked sharing didn’t require payment. Also how is this different than calling a taxi service?

Airbnb is a home “sharing” service. But it really isn’t any different than any of the other short term rental services than have been available for decades.

What is really going on is that it has become effective to set up two sided markets since both those who have something (suppliers) and those who need something (consumers) are now online. The company setting up the market provides an easy way for the 2 parties to connect. Given enough suppliers there will always be availability for the consumer. Since the job of the company is to ensure there are plenty of suppliers for the consumers rather than purchasing and maintaining the product there is little overhead other than marketing.

Even this isn’t a new concept. I once did some work for a company whose product was a catalog of other companies that had manufacturing waste such as scrap steel and construction debris. They spent all day on the phone calling other businesses looking for someone who wanted these things. What is different now is the cost of finding these people.

What is new is that since it is so cheap to connect suppliers and consumers now it becomes effective to rent items that are less expensive. I don’t have to have a fleet of cars, I can just rent the one I have and only when I want to. The market of suppliers provides coverage when I am unavailable.

All the suppliers are also listed in one place (not really since there are competitors to Uber) so it is easy to find one. Additionally there is typically a reputation system so that both the supplier and the consumer can rate each other. This keeps the system in balance and encourages both parties to be nice and do a good job. However, that reputation is only good for that market. I can’t take my Uber rider reputation and use it at DogVacay.com.

I get that the term “sharing economy” is here to stay, and that’s fine. But the next time I share my cookies with you expect a bill.

I hire technical people primarily. Each position has a number of key technologies that need to be accounted for. I use the “audition” approach wherein the candidate does what I actually want them to do as an employee (e.g. write code). I’m not all that interested in how well they interview (although it does helps me understand their soft skills).

Hiring in-person  for a position in our office is different than hiring a remote employee who will interview and work remotely.

Beyond the basic technical abilities which are teased out during the audition the key traits in a remote employee I’m looking for are: