Kill Hollywood

YCombinator's Paul Graham has a great reaction to SOPA/PIPA. Here are some highlights:

The main reason we want to fund such startups [that will compete with movies and TV] is not to protect the world from more SOPAs, but because SOPA brought it to our attention that Hollywood is dying. They must be dying if they're resorting to such tactics. If movies and TV were growing rapidly, that growth would take up all their attention. When a striker is fouled in the penalty area, he doesn't stop as long as he still has control of the ball; it's only when he's beaten that he turns to appeal to the ref. SOPA shows Hollywood is beaten. And yet the audiences to be captured from movies and TV are still huge. There is a lot of potential energy to be liberated there.

How do you kill the movie and TV industries? Or more precisely (since at this level, technological progress is probably predetermined) what is going to kill them? Mostly not what they like to believe is killing them, filesharing. What's going to kill movies and TV is what's already killing them: better ways to entertain people. So the best way to approach this problem is to ask yourself: what are people going to do for fun in 20 years instead of what they do now?

There will be several answers, ranging from new ways to produce and distribute shows, through new media (e.g. games) that look a lot like shows but are more interactive, to things (e.g. social sites and apps) that have little in common with movies and TV except competing with them for finite audience attention. Some of the best ideas may initially look like they're serving the movie and TV industries. Microsoft seemed like a technology supplier to IBM before eating their lunch, and Google did the same thing to Yahoo.

Blackout

The Internet is killing the entertainment industry. It is becoming increasing difficult to protect copyrighted materials from being posted online. In the past these materials would have earned the entertainment industry money, but now they are becoming free. The business model that the entertainment industry has come to rely on is increasingly becoming unworkable in an Internet era.

Their reaction? To lobby the government to introduce bills (SOPA/PIPA) that provide unprecedented powers of censorship to the entertainment industry.

While Google...

... and Wikipedia...

 ... have taken some action against these bills,  Seth Godin probably says it best:

It's painful, expensive, time-consuming, stressful and ultimately pointless to work overtime to preserve your dying business model.

...

Breaking systems that benefit your customers is dumb. Taking money from lobbyists to break those systems is dumber still.

Forget failure. Just do it.

Building a next generation, cost-efficient enterprise

One of the benefits of building a company from scratch, and doing it in a bootstrapped way, is that you are really forced to do even the simplest of things in new, innovative and cheaper ways than a Fortune 500 company might. In this way, even if you were to do nothing but create a company that replicates an existing business, for example, a realtor (real estate) chain such as Foxtons, you could create the business in such a way that it has significant cost advantages. With these cost advantages, your business might even be able out-compete the more traditional type of firm.

Perhaps the most stark example of emerging cost advantages that new firms have is through the gradual elimination of IT infrastructure costs. In many companies, IT infrastructure is a significant investment that covers desktop application software, computer hardware and IT support staff that manage these. If you are building a company from scratch, you can build an enterprise that has little of few of these types of costs. How? With Google Apps.

Current and upcoming features in Google Apps include

• Web based docs, spreadsheets and other office software - all of which is free, comparative to Microsoft Office.
• Management of your web site and domain.
• GDrive, Dropbox-like software that will integrate your offline storage with Google docs online, and thus also provide back-ups.
• Chromebook laptops that are integrated with Google Apps. They can be leased at approximately $300/year - and so can be cheaper than dedicated, purchased hardware.
• Google Apps, and their partners', support staff, who provide assistance in using these services.

Clearly a Google Apps centric solution is not as feature rich as tradition solutions... but how many organizations need those rich features? And is it worth the additional cost?

Beyond the cost of IT infrastructure, there are other areas where cost advantages are possible.

• The use of offshore, remote workers that can be employed for simple tasks using oDesk and other contractor platforms. Do you really need to hire administrative staff at full US staff costs, or can a remote worker (at a fraction of the cost) suffice?
• In some cases Western workers are required, because of the nature of the work involved. In those cases, can you employing segments of the population that are normally not considered by other firms, and hence can be cheaper? These include, for example, the retired and stay-at-home mums.
• Maintaining all documents and literature in electronic form, and hence eliminating filing cabinets of paper, and reducing the amount of office space required. Just think about how much paper that your legal department has, for example.
• Allowing staff to work from home, so the office is just a place used for meetings and work that requires collaborative effort. This again reduces the amount of office space, and overhead costs, required to run a business.
• Use of Skype and Google Voice to reduce or eliminate telephone costs. Use of Join.me, instant messenger and email to enhance collaboration.

New companies that are starting right now, particularly if they are bootstrapping, are already incorporating many of these practices. Over the long-term, if they maintain these practices, these firms will have significant cost advantage over existing traditional firms. Older, more bloated, firms may not be able to compete with these next generation firms.

37Signals' Jason Fried: The Drug-Dealing Model of Online Business

What customers are coming to expect

An interesting excerpt from IDEO's Patterns:

Despite its reputation as a suffocating bureaucracy, China is a place where virtually anything is possible and everything is available. Want a custom-made suit for less than US$50? Knock-off Italian furniture? Unlocked iPhones? China has it all — if you know the right person on the right street corner. This no-holds-barred approach, or abundance service, has become legendary at places like Shanghai hot-pot restaurant Hai Di Lao (海底捞火锅店).

“THIS IS THE BEST FRICKING HOT POT RESTAURANT ON THE FACE OF THE PLANET!!!” wrote one reviewer. “It rivals the Ritz Carlton. Free drinks if you want them. They will bring new eyeglass-wiping cloths to wipe the steam from your glasses and offer to do it for you. …there is a children’s playroom, and there are small tables with Chinese Checkers and Chinese Chess, and they have a team of women who will give you a professional manicure. THIS PLACE IS AWESOME.”

Note that this breathless review raves about the utterly satisfying dining experience, not the meal. The restaurant’s reputation is for service—and, increasingly, that’s what customers are coming to expect.

Pretend you're 100% sure

"You have to pretend you're 100% sure. You have to take action; you can't hesitate or hedge your bets. Anything less will condemn your efforts to failure. "

-- Andrew Grove, Intel co-founder