Category: 3 – SHELF it (All Categories are 1 – Read ASAP!, 2 – BUY it!, 3 – SHELF it, 4 – SOMEDAY it)
Comments: Interesting book, especially for those who are interested in the impact of “free” on business and industry.
Top 3 Learnings:
1. The world is moving from scarcity to abundance in most aspects of life. As a result, the structure of the world and business has undergone a fundamental change. A 100 years ago, all the top 100 companies in the world were involved in manufacturing. Now, the percentage is down to 30%.
The moment an industry moves from transmitting atoms (boxes) to bits – free becomes inevitable. So, if the industry is competitive (and we can argue that the Internet has resulted in more competition than ever before), then prices will keep going down till it just covers cost.
2. The important thing for companies is to adapt their business model to incorporate free as an integral part of their model. Free is here to stay.
Examples –
– The popular freemium model wherein businesses give a basic product for free and charge for premium usage
– Microsoft went through the DABDA curve in its reaction to Linux operating systems. While it initially began with the lens of competition, the end result was an acceptance that there is a place for open source in the market. Small companies would rather go open source as its free while big companies would pay money to minimize risk.
– Google’s strategy for information markets – 1) take whatever you are doing, do it for free 2) hook users in and generate scale 3) charge for valuable information Search and Gmail are easy examples. Another such example is Goog-411 – free voice help which is part of Google’s investment into a voice search engine.
– Music – 90% of money is made by bands is in concerts! So digital piracy (or free) helps the band find willing fans
3. The importance of corn – rice, wheat and corn have always been considered the key crops. Rice is high on protein but difficult to grow, wheat is low on protein but easy to grow, and corn is both. Since corn is the most efficient converter of water and sun light into starch, we use corn for more than we can imagine.
More than 25% of the products in a super market are derived from corn. In fact, soaps, shampoos, toothpastes, the boxes they are packed in, and even the compounds that the super markets are built with are based on corn. A great example of corn power is in a chicken nugget. From the feed of the chicken, to corn oil, to the golden color and smell – nearly every aspect of it is derived from corn.
The big reason corn and food have gotten expensive over the past few years is that corn began being used for the production of ethanol for fuel. This has truly tested the limits of corn.
That was a really cool insight.
(Book notes here)
Marler's Observatory 