Why Startups Have the Power to Lead America’s Innovation Revolution

Posted February 12, 2013

We’re living in a golden age of tech-focused entrepreneurship right now. Not since the industrial revolution has there been a more perfect opportunity for innovators and inventors to create something remarkable. At the same time, non-entrepreneurs (the old school model) are fighting with everything they have to preserve the status quo. Old models are always resistant to change, not just because they want to preserve their power, but because they can’t innovate fast enough to keep up with the entrepreneur.  For example, you’ll never be able to stream all the movies you want to watch on Netflix, because the physical media/mail model creates an artificial scarcity of movie discs. That’s a deal that works out better for the movie studios Netflix contracts with. The “new” perspective (that of a technology-powered innovator), is that the means to stream all of those movies (and actually, any movie ever made) not only exist, but are likely cheaper than physically mailing discs across the United States. Yet, we’re still using the post office and not ISPs to route those movies. The late Reddit co-founder Aaron Swartz faced criminal charges for illegally distributing academic journal articles—journals that have fought as hard as they could to be treated like print-only publications in an age where no one really accesses academic journals in print form (unless you buy the PDF online, and then print it yourself). And I could just mention the phrase “music industry,” and you would probably be able to draw your own conclusions about old-model barriers to content-access fighting new innovation. But that’s the nature of the old models trying to maintain their status quo. If we’re talking about content, the go-to tactic in the digital age is to put artificial barriers to reproduction, even though digital files cost nothing to reproduce. Of course, access to data, content, and information is just one of several battlegrounds between the status quo and the entrepreneur, but I think it’s the best way to illustrate my point. Where the status quo exists, it exists defensively, fighting to preserve itself as best as it can. But that’s where you, the brilliant entrepreneur, come in. The opportunity is in innovation. Innovation comes from solving a problem—removing unnecessary barriers. But, innovation always begins with disruption. I’m not telling you to go out and create a better Netflix or music sharing service, though I’d sign up faster than you could say DRM. There are bigger challenges than the  technology aspect of fixing those broken systems, namely the contracts with old-school media companies who want nothing more than to preserve the status quo as long as possible. If there weren’t, we’d already have these things. But, those intersections, where innovation is badly needed to move beyond an old model, are where opportunities exist. In fact, those might be the best opportunities in the entire world. This isn’t a guide to starting a successful start-up, or a critique of the one you may be currently working on. Rather, I hope it alerts you, as startup generals, to the attack points you’ll want to move your troops to in this great battle for the next “it." I’ll leave you with three examples of remarkable entrepreneurs who I’d like to fan for beating the old, and shifting the paradigm for how we view their industry. 1. Uber. I think the reason customers love Uber is because they have completely erased the friction involved in getting a cab. Arrange for a taxi without having to take your chances by waiting on a street corner, trying to hitchhike like a regular plebeian? To a cabbie, being able to arrange and schedule rides without having to drive around aimlessly fishing for fares, allowing you to optimize and (gasp!) plan your schedule? The only people who don’t seem to like Uber are the cab drivers who don’t use it. Every cab driver I’ve talked to in Chicago loves the service. These guys practically saved my life on New Years, which doesn’t make me biased in the slightest. Nope. 2. ZocDoc I almost hate having to make appointments for the doctor or dentist more than whatever needles and cold hands await me when I arrive. Here’s how a typical old-system appointment works. You call your doctor's office, and spend several minutes listening to a recorded voice rattle off options on a phone tree. Then, you end up reaching your doctor’s voicemail, so you leave a long message about when you’d like to schedule an appointment—and then you get a single phone call 24 hours later. You call back to confirm, and well, repeat from the beginning. ZocDoc blows all of that up. Instead of playing phone tag, you and your doctor find a time with web-based, real-time scheduling. You pick the appointment time you want, give them your insurance information ahead of time, and they email you an appointment confirmation. It’s automated from the doctor’s end, too, so they don’t have to waste time playing phone tag. You just accomplished in five minutes online, what could have taken a couple of days. Win. 3. Food Trucks. Period. I can’t say enough good things about food trucks. At least from a food-eater perspective. We’ve discussed the politics of them before on Technori. That aside, holy luchadore tamales! This is a great time for food trucks. There are limited lunch offerings around my office in Chicago, and building brick-and-mortar restaurants just isn’t feasible in the area. The food trucks (who have adopted the business practice of clustering) have converted a previously-famished city block into a mobile food court, with more creative offerings than you’ll find in any actual food court. The best part: they no longer require a storefront to capture customer attention. Social media replaces the necessity of a creating a customer relationship based on geography. The food truck community is very supportive, too, often sharing their truck’s location on social media with mentions of their competitors as well. And almost all of the trucks I’ve seen can take credit cards and process rewards cards/customer management like a real restaurant. Oh, and the food is pretty damn good too. So, what barriers are you trying to bring down?