David Cummings on Startups is one of the most readable columns and I love his insights. In a recent post he writes about the need to challenge inertia. In other words this resonates with disruption. Sometimes status quo becomes the norm and there are lores of how Kodak sat on the Digital photography technology for over 3 decades because they believed that they were in the chemicals industry and not of memories. Sometimes entire industries are in denial – like, you guessed it – the music industry – which fought back Napster. A lot of it is still visible in the book industry that still doesn’t allow or have figured a way to allow the owner of a copy of a Digital book to be shared or loaned. The traditional license model of softwares, remember? I wonder what they are thinking about these days? Oh wait they have actually moved to a more sustainable Cloud/SaaS model where they cannot force customers to upgrade. Remember the backlash on Apple when users figured they are deliberately slowing down the phones through updates in OS? The same old Microsoft / Intel combination all over again.
Coming back to David’s post, he was writing about the inertia in the Real Estate industry which insisted on 5 years lease and LOC’s before some one could get an office. His solution – buy a building and roll out your own terms that are user friendly. He quotes his Atlanta Tech Village (a million sq. foot of office space ) and WeWork as examples of challenging inertia.
A recent analysis of WeWork numbers, despite its $47B Valuation, which is heavily dependent on renting office space, is not very inspiring. Their 2018 revenue fell short of their Series D raise projection of 2.9B by $1Bn ( $1.8B). While their mantra is Community, much like David’s Atlanta Tech Village, a lot has to fall in place for it to be able to sustain loosing nearly $2Bn/ year (2018 loss – $1.9bn which itself was up 103% from 2017).
There is not doubt that WeWork is challenging inertia in the commercial real estate industry. However the ability to remain asset light is key in all these enterprises that WeWork refers to (although AirBnB needs apartments and Uber needs cars neither is investing in either, unlike WeWork). The point I am making is, Challenging the Inertia is the key to all disruptions and thus creating new Decacorns, but having the fundamentals (your flywheel to positive revenue) clear is also the key. At least figuring it out sooner than later.
How is your challenge going? Do share.
Link to David Cummings on Startups column
Challenge the Inertia Around You https://davidcummings.org/2019/05/04/challenge-the-inertia-around-you/