Business, Law, and Innovation
Class Exercise:
Creative Destruction
Lecture 2
Spring 2014
Professor Adam Dell
The University of Texas School of Law
Recall What Creative Destruction Is..
2
Types of Creative Destruction
There are numerous types of innovation-generating creative destruction in an industry:
New markets or products
New equipment
New sources of labor and raw materials
New methods of organization or management
New methods of inventory management
New methods of transportation
New methods of communication
New methods of advertising and marketing
New financial instruments
3
Let’s look at some industries
That are getting destroyed / re-invented
Personal transportation
Delivery Services
Point of Sale
Food Systems
4
Personal Transportation
Uber
How many of you are customers?
Prefer the experience to typical car
service?
Would recommend it to a friend?
Found it price competitive?
Uber – Value Proposition
Value Proposition:
To the consumer?
To the driver?
To the dispatch companies?
Uber - Economics
Black car is a $11b market in the US.
Uber is already in India.
Uber takes 20% of the total.
Pays drivers immediately.
Less expensive than a traditional car service.
Spends $0.00 on marketing.
Doesn’t have one of these:
Uber - Economics
Instead it has this:
Uber - Economics
Instead of this:
They have this:
Uber – Competition
Lyft
SideCar
Hailo
RelayRides
?
Uber: Regulation
Willie Brown, former mayor of SF, got a condo at the St.
Regis from the taxi commission…
And Uber:
Regulations Prompt New Fight Between D.C. Taxicab Commission ...
wamu.org/.../new_regulations_prompt_new_fight_between_dc_taxicab_...
Aug 21, 2013 - But the D.C. Taxicab Commission has passed regulations ... Linton insists the commission
is not picking another fight with Uber, which fought ...
D.C. Has Already Outlawed Uber's New Taxi Service - WNYC
www.wnyc.org/story/313837-dc-outlaws-ubers-new-taxi-service/
Aug 21, 2013 - Linton insists the commission is not picking another fight with Uber, which ... "The D.C.
Taxicab Commission does not fight with the people it ...
Stakes in Uber vs. taxi fight are higher than most people realize ...
www.dallasnews.com › Opinion › Sunday Points
Aug 30, 2013 - In Washington, D.C., the Taxicab Commission is trying to stop Uber from offering cheap
rides in small cars. In New York City, it took a massive ...
Taxi Commission Passes New Regulations To Block UberX, Uber ...
dcist.com/2013/08/dctc_passes_new_regulations_to_bloc.php
Aug 20, 2013 - Yesterday, the D.C. Taxicab Commission passed new regulations that will ... it work:
"Consumers want Uber in D.C. We're going to fight for that.
FTC sides with Uber in DC taxi fight | TheHill
thehill.com/blogs/hillicon.../305161-ftc-sides-with-uber-in-dc-taxi-fight
Uber – Expanded and Expanding to
Taxis, Rental Cars, Delivery, Helicopters, Planes.
What’s next?
If you were the head of product?
Point of Sale
Square / Shop Keep / Bread Crumb
How many of you are customers?
Prefer the experience to typical point of
sale system?
Would recommend it to a friend?
Found it price competitive?
Square – Value Proposition
Value Proposition:
To the consumer?
To the merchant?
To the credit card companies?
Square – POS Market
Global POS hardware market to reach $31 billion
globally, 2014.
Square – Unit Economics
Global POS hardware market to reach $31 billion
globally, 2014.
VS
Point of Sale – Economics / Competitors
+
VS
Delivery Services
Task Rabbit
How many of you are customers?
Prefer the experience to typical messenger service?
Would recommend it to a friend?
Found it price competitive?
Task Rabbit – Value Proposition
Value Proposition:
To the consumer?
To the rabbit?
To the messenger companies?
Task Rabbit- Economics
Delivery Industry is a $15b market in the US.
Task Rabbit takes 15% - 20% of the total.
Pays rabbits immediately.
Less expensive than a traditional messenger service.
Spends $0.00 on traditional marketing.
Doesn’t have one of these:
Task Rabbit - Economics
Instead it has this:
Task Rabbit- Regulation
Doesn’t seem to be a problem…yet.
What could go wrong?
Task Rabbit– Expanded and Expanding to
Delivery, Cleaning, Odd Jobs, Handy Man, Virtual Tasks,
What’s next?
If you were the head of product?
Task Rabbit– Competition
Favor (here in Austin)
HomeJoy (just raised $38mm)
Zeel (massage)
GetMaid (cleaning)
Cherry (car wash)
Food Systems
Good Eggs
How many of you are customers?
Prefer the experience to typical grocery store?
Would recommend it to a friend?
Found it price competitive?
Good Eggs– Value Proposition
Value Proposition:
To the consumer?
To the farmer?
Good Eggs- Economics
Grocery industry is a $650b market in the US.
Traditional operaters live on tiny margins, 3-4% points.
A few outliers: Whole Foods.
Good Eggs –Expanding to:
Brooklyn, SF, LA, NOLA
Task Rabbit– Competition
Amazon Fresh
Fresh Direct
Whole Foods Delivery
Class Exercise: What’s Next
Can you envision creative destruction in an existing market?
How would you do it?
You can deliver cheaper?
Without advertising?
Without people?