This is the second part of About.com's interview with Andy Kessler, author of Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs. The first part is here.
What markets are ripe for "eating people" and where do you see a lot of room for new companies to emerge?
Outside of the obvious jobs of, say, police work or cleaning or other obvious people intensive business, every category of business is ripe for doing more with less people involved. Retail is being shaken up by Amazon. We no longer need to stock shelves and can instead ship from centralized warehouses. This trend has only just begun. Sales and marketing professions are under attack from web advertising and search engine optimization techniques. Even fast food restaurants are going to more of a self service model, order yourself from an iPhone app and then pick up your order at the counter.
The white collar workplace is seeing a tornado blast through it. Word processing has eliminated many secretarial jobs. Unlike the days of Mad Men, offices don't need typists and filers and the like. Voicemail has eliminated many receptionists. Fortunately, we have created a whole new set of higher paying jobs developing and installing these tools for the next wave of white collar workers.
Lawyers are under attack. Tools like eDiscovery scan millions of documents looking for keywords ahead of litigation, eliminating lawyers and paralegals who were paid handsomely to read these quite dull documents.
We can even cut back on the number of doctors and nurses and health care professionals by using cheap technology to test us for disease well before they turn into chronic problems requiring hospital care. Chips to detect cancer in our blood stream or scans to detect heart disease early before heart attacks will cut back on visits to chronic care facilities and the number of doctors and nurses needed. A great use of "Eat People."
You have a pretty deep technology background and most of the companies that you refer to have a strong tech component, including Wal-Mart, whose growth was enabled by technology. Are there "low tech" businesses operating today that you admire?
The reason for my technology focus is mainly based on the first Rule of "Scale." So much of technology rides lower and lower cost curves, which create elasticity of demand and create huge markets to sell into. This isn't to say this can't happen with other "low tech" businesses, it is just that much harder. I think the way to do it is to find a new way of doing something that allows your customers to do more with fewer resources. Sounds simple, but is quite hard to pull off in real life.
But it's not impossible. A set of stores in places never reached before. Or time savers. I love time savers. My last ski trip introduced me to a service called Black Tie Ski Rental. They come right to your condo at night, measure you and then drop off exactly the skis and boots you need right to your accommodations, saving you a good 30 to 45 minutes in the morning of waiting on line. I would be happy to pay a premium for a service like this. Does it Scale? Not really, but they can probably charge a high enough premium to make it a profitable business and then repeat it in as many ski resorts as they can.
Is entrepreneurial behavior within a company terminal? That is, do most or all companies eventually become victims of their own success? Even Google can't make decisions quickly anymore. And if this is true, can companies overcome this, and if so, how?
Yes, once companies reach a certain size, management no longer knows everyone by name and a command and control organization begins to form. "I report to John who reports to Joe who reports to Jane…"To be entrepreneurial, companies need to constantly focus on Rule #4, "Intelligence moves out to the edge of the network." This is true of the markets and segments they are attacking, as well as how to harness their own employees. Workers in the trenches, collectively anyway, know more than the CEO who often sees a much filtered view of what is going on, colored by underlings who want to look good, often at the expense of the company doing well. It's a problem, but it doesn't have to be fatal. Apple is a great example of a company that still behaves with entrepreneurial gusto, putting out new products that compete with old products.
I think the best way for companies to overcome their inherent command and control structure is to embrace Rule #8, "Markets make better decisions than managers." Companies have limited resources. Rather than allow political decisions by managers, create a market place to allocate resources for new product or service developments. Maybe your customer bids on future developments, maybe it's employees who are provided virtual "funds" that they use to bid on what they want to develop. Much the same way that groups now bid on conference rooms so they go to the best use, or that grad school students bid on campus interviews so someone that really wants to interview with Goldman Sachs spends all their "funds" on that particular interview, companies can harness the intelligence at the edge via markets.