Simply Shankar

Finally decided to get off my butt and start writing more regularly. Been giving my high schooler lots of advice lately about pushing herself to do more and the hypocrisy was beginning to grate on my conscience

Been a pretty interesting past few years during my pause. All the exciting stuff at work and home has been dwarfed by what’s happened with the Web. It has continued to steamroll along on its journey to transform the business world. Mobile and handheld devices have added high octane fuel to the fire. Our household now has 3 iPhones and 3 iPads for 4 people.

But, I believe that we’re very very very very far away from reaching full potential. Let me explain.

The promise of the web from a business perspective is extremely simple – efficiency.

Efficiency is gained for businesses through access to:

1. Information: while the web today delivers a lot of information, we suffer from the needle in the haystack challenge. Getting to relevant information is not just extremely difficult but also near impossible in many cases. Another complication is that several businesses consider information their crown jewels and are very reluctant to share this with other businesses.
2. Technology: this is probably where the web is farthest along. However, availability and cost across the globe especially in developing countries remains a challenge.
3. Expertise: the web is least mature from this perspective. While there are things like discussion forums and marketplaces for work like Mechanical Turk or eLance or oDesk, we don’t yet have a widespread and well established notion of virtual workforces that businesses can rely on.

While there is a lot of focus on #1 and #2, there isn’t enough focus on #3.

This is a HUGE problem because #3 is a BLOCKER.

Without widespread and stable access to expertise, no business can do anything useful with all the information and technology thrown at it. I believe we are now at that juncture where #3 is going to rapidly become an issue.

I rest my case.

Sometime back, I had written about how Web 2.0 was really about a fundamental shift in business models. It seems like a shift is underway in the Music business. This post on Warner Music’s woes highlights the symptoms of what is really taking place.

Historically, there have been four actors involved in the Music business – the artist, the studio, the distributor and the customer. Clearly, the artist and the customer are indispensable. However, the studio and the distributor are increasingly threatened – the former more than the latter.
Studios used to play an important role in the pre-web/immature web world because their employees actively sought out artists with good talent, cultivated and promoted these artists and ensured the success of these artists. They were really adding value – it was simply not feasible for either the customers or the artists to easily find each other. Of course, over time this gate keeping role translated to a lot of power for the Studios – they were able to promote artists irrespective of the level of talent, leading to poor choices for customers and poor deals for artists.

With the rising maturity of the web, there is really no need for any of the function Studios play. Artists can easily get exposure and the quality of their talent can be vetted by the web community at large. Once established, artists can even directly hawk their wares to their customers (like the Radiohead example in the blog post I cited above). The music industry now operates purely on meritocratic principles.

The mature web also brings a whole new distribution model to music – digital downloads. Outlets like iTunes and Amazon have displaced distributors relying on selling physical media.

Ultimately, I see the emergence of a few large music marketplaces that bring artists (especially those trying to establish themselves) and customers together. These marketplaces would be very efficient in bringing the best music at the best prices to customers and ensuring just rewards for talent.

Over the next few years we should witness a tussle between Studios and Distributors to establish themselves as one of these marketplaces. On the one hand, Studios have relationships with artists (not sure if these are very strong relationships) and on the other Distributors have relationships with customers. I would myself bet good money on the distributors winning this one – they seem to have a much stronger hand …

The other day, I was ordering some diapers from Amazon for my son and I was asked if I wanted to “subscribe and save”. Found out if I set up a repeating schedule for the delivery of diapers, I get a 15% discount. Seemed like a really good deal – besides a price cut, I don’t have to deal with remembering to order every ever so often and Amazon gets all my diaper business.

When talking to my brother about it, he brought up a really good point – what Amazon has done here is to extend the supply chain all the way to me, the end-customer. They’ve gotten to the ultimate level in efficiency! I guess we will be seeing more and more of this type of personalized supply chain in a Web 2.0 world. Be pretty cool if this happened with other aspects of our household consumption – especially with groceries like Milk, Bread and stuff – I definitely do not enjoy making those late night trips to the store …

Met brothers Sandeep and Rajiv at a social occasion the other day – they are the brains behind EffinFunny, a web site that offers professionally created video clips from up and coming as well as established comedians. While the site and content are really cool (I highly recommend you check it out for yourself), what is very interesting is how the company is aiming to change the business of stand-up comedy. I think it is another great example of what Web 2.0 is really all about.

EffinFunny uses professional resources to videotape comic performances at live shows they organize once a month (currently in L.A. only). The company then applies a rigorous editorial process to distill the best content from these performances and releases this content on its site. Anyone who wants to is able to try out at their shows – there is no pre-qualification.

What EffinFunny is doing is creating an open and efficient marketplace for comic talent. Folks visiting their site get high quality content from the best up and coming comedians – they don’t have to sift through digital garbage like they need to at sites like YouTube. The up and coming comedians get to show off their wares without really worrying about issues unrelated to their core competence like making slick videos. Anyone looking to hire/use new comic talent gets to see the comics in action and compare them with their peers in a cost and time effective manner. All in all, Web 2.0 at its best.

Our family recently decided to get back to renting DVDs after a somewhat long pause (we had a second child and could not find time to watch movies). I consider us pioneers in online renting – angered by a somewhat stiff late fee at the local video store (just like the ad :-)), we signed up for Netflix pretty early on. We loved the online renting model and enjoyed it for a long time until we found we were not really doing justice to the $20+ monthly fee we were paying. So we quit.

This time around, realizing there were other options besides Netflix, I took the opportunity to research all of them and found Blockbuster’s model the best by far. After struggling to find its place when Netflix became a significant player, I think Blockbuster has come back with a virtually unbeatable model – it has cleverly combined its online and in-store rental businesses to offer fantastic value and flexibility to customers. I pay around $10 a month. I get to rent one movie online and whenever I’m done with it, I get to exchange it for a free movie in-store and the next movie on my online queue is immediately shipped to me (no waiting for the movie to get back to their warehouse). Plus, I get to rent a bonus movie free from the store every month. Blockbuster does not come out a loser either; invariably, when I’m in the store, I pick up another movie, paying the normal fee for it – so they get some more revenue from me.

I think this is a great case study on how a company faced with disruption has been able to not only find a way to compete effectively but also get to a position of great strength. Of course, the new disruptor for all of these guys is video over the web …