Dynamic Competition in Digital Transformation and Disruption · • In 1977, deal with Schwinn to manufacture bikes as an OEM, sold exclusively under other brand names. • In 1980,

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Dynamic Competition in Digital

Transformation and Disruption

January 2020

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Platforms vs. Pipelines

• Network Effects

• Economics of Digital

• Competitive Advantage: Digital vs. Traditional

• 6 Digital Superpowers

and / or

• Regular Digital Business and Dynamic Competition

Main Ideas

www.jeffreytowson.com

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

2www.jeffreytowson.com

• Three Simple Digital Rules (Part 1)

• Case: Mobike vs. Ofo vs. Giant

• Three Digital Rules (Part 2)

• There Is No New Chinese Sharing Economy: 5 Questions

• Digital Transformation Frameworks Are Everywhere

• Break

• How Platforms Evolve (Sometimes)

• Case: Didi vs. Uber vs. Geely

• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 1: Give Customers EXACTLY What They Want –

Or Someone Else Will

Rule 2: Digitize and Re-Imagine Operations ASAP

Rule 3: Get Ready for Super-Platforms – and for

Industry Boundaries to Move and Fall

3 Simple Rules for Chinese Digital

Transformation


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

4

Jeff Towson photo


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Bike-Sharing Surprised Everyone

• Launched in 2016 by Mobike in Shanghai and Ofo in

Beijing.

• Over 30 competitors quickly jumped into the space.

• The two market leaders put over 12M bikes on the streets.

• It happened very fast. And created an overwhelming

presence.

• Nobody saw it coming.

• It left bike OEMs stunned. And docked bicycles

systems obsolete.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

6

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

What Other Physical Product or

Service Has Become This Pervasive

This Quickly?

7

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

What Was the Engine of the Bike-

Sharing Phenomenon?

• It wasn’t a new technology or invention.

• It wasn’t a new fad.

• It wasn’t even a big change in consumer behavior.

• It’s just a bike rental business.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

It Doesn’t Have the Advantages of Big

Retailers or Asset-Heavy Consumer

Services

• No stores. Location doesn’t matter

• No sales staff.

• No marketing spend, at all.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Is This a Software Company?

• It isn’t sharing, ride-sharing or the sharing economy.

• No network effect

• No big R&D

• No viral marketing

• No data network effect, personalization or other data /

usage benefits


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

It Was About Convenience and

“Purification of Demand”

• Software and digital tools can give consumers exactly what

they want, when they want, where they want & how they want.

• Steve Jobs did this. So did Netflix.

• It can change the equation between ownership and access

businesses in particular.

• And demand-side scale is critical in the age of abundance.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Bike-Sharing Disrupted with

Increased Convenience

• Chinese bike-sharing offered convenience and a low price. It

gave consumers what they never knew they always wanted.

• And unleashed a sea of latent demand for bike-riding.

• Faster in China due to enthusiasm, mobile payment,

urbanization and price effect.

• This is a common line of attack on both access and ownership

businesses in China right now.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 1: Give Customers EXACTLY

What They Want – Or Someone Else

Will.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Other Examples of This Approach?

- Media / Entertainment

- E-commerce

- Communications

- Healthcare

- Finance


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• This especially applies to retail and e-commerce

• Customer has to go and get the product or service.

• A time lag between when you buy and receive.

• User experience doesn’t match global best practice.

Companies Not Giving Customers Exactly

What They Want Are At Risk


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Also if:

• One group of customers subsidizing another.

• Must buy whole thing and not just parts you want.

• Physical products without connectivity – or with high

gross margins?

• Anything that can be embedded with social media.

Companies Not Giving Customers Exactly

What They Want Are At Risk


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

19

• The smart bikes are independent assets that have the

ability to market, sell and deliver the service

themselves.

• As they are mostly independent assets, they can be

released in great numbers.

• Releasing independent “assets into the wild” is a really

unusual approach.

They Also a Re-Imagined Business

Model Based on “Independent Assets”


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

20


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

21

Photo by Jeff

Which Company Is Paying for

Advertising in this Picture?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Marketing and advertising

• Retail operations – real estate, shelf-space

• Sales staff

• Manufacturing

***

• What capabilities (tech, people, processes) do these

companies have that traditional bike-rental and

manufacturing companies lack?

What Ops Were Digitized or De-

Materialized?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 2: Digitize and Re-Imagine

Operations ASAP


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


• Integration of physical retail sites

• Cross-border capabilities

• Data-driven, seamless consumer experience (online,

offline, big data, AI)

Companies Not Digitizing and Re-

Imagining Are At Risk


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Can You Think Of Another Physical

Product or Service That Has Become

This Pervasive This Quickly?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

26

Question: Is Bike-Sharing

Sharing?

Is It a Platform?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM





• There Is No New Chinese Sharing Economy


• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Case: Mobike vs. Ofo vs. Giant

Bicycles


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

29

• Founded by late 2015 by Hu Weiwei, Davis Wang, Xia

Yiping

• Hu studied at the Department of Journalism of the

Zhejiang University (2000–2004) and graduated with a

bachelor of communication.

• Hu worked for the Daily Economic News (每经网), a

Chinese business newspaper, mainly covering tech

news on cars. She then worked for The Beijing News

and for Business Value in technology news.

• In 2014 Hu founded the media platform GeekCar.

• Hu assembled a team in late 2015 to start a bicycle-

sharing company and launched company in January

2016.

• Co-founder Wang Xiaofeng, the general manager for

the Shanghai office of Uber also known by his English

name Davis Wang, became Mobike's CEO.

Group 1: Mobike


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

30

• Launched in Shanghai. Focused on last mile problem. Too far too walk and

too close for taxi.

• Built to be on the streets for 3 years. Anti-rust aluminum. Reinforced kick-

stand. Shaft instead of chain. Airless tires.

• Originally required deposit and then 1rmb per ride. Discontinued deposit

(ouch for ofo). Only mobile payment. Scoring system based on usage and

behavior.

• Invested by Tencent.

• Now the largest bike-sharing company. +200 cities in 19 countries.

• International expansions included SE Asia, Latin America, Europe.

Mostly in 2017.

Group 1: Mobike


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

31

• Founded by 2015 by Dai Wei and 4 other members of the Peking University

cycling club focused on bicycle tourism. Became bicycle sharing. Launched in

June 2015 in Beijing, gaining 20,000 users and 2,000 bicycles by October

with investment funding from a Peking University alumnus.

• In 2016, raised $130 million in funding, including Xiaomi and Didi Chuxing. A

Series D funding round in February 2017, led by Didi Chuxing and Russian

investor Digital Sky Technologies, raised $450 million for ofo and valued the

company at $1 billion

• In 2017, it had deployed over 10 million bicycles in 250 cities and 20

countries. The company was valued at up to $2 billion and has over 62.7

million monthly active users.

• In July 2017, ofo announced $700 million of additional funding in a round led

by Alibaba, Hony Capital and Citic PE.

• 2018 massive decrease in operations. Lawsuits by suppliers for non-payment.

Didi buys Bluegogo and has own bikes. Meituan buys Mobike.

Group 2: Ofo


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

32

• Established in 1972 in Taiwan by King Liu and friends.

• In 1977, deal with Schwinn to manufacture bikes as an OEM, sold

exclusively under other brand names.

• In 1980, bike sales increased in the U.S. and workers at the Schwinn plant

in Chicago go on strike. Giant became a key supplier, making more than

two-thirds of Schwinn bikes by the mid-1980s, representing 75% of Giant’s

sales.

• In 1987, Schwinn signed a contract with the China Bicycle Company to

produce bikes in Shenzhen. Giant, under new president Bill Austin

(formerly vice-president marketing at Schwinn), established its own brand

of bicycles to compete in the rapidly expanding $200-and-above price

range.

• By 2018, Giant had sales in over 50 countries, in more than 12,000 retail

stores. Total annual sales in 2017 reached 6.6 million bicycles with

revenue of US$1.9 billion.

Group 3: Giant Bicycles


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

33

• Rule 1: Give consumers what they want.

• Revenue and pricing plan? Can you purify demand?

• Rule 2: Digitize and reimagine operations.

• How digitize customers?

• What operations would focus on first?

• What are your competitive strengths / differentiation?

• Do you have any digital superpowers? Does your competitor?

Question: What Do You Do?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM







• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

35

Is Renting Bikes vs. Electric Scooters

That Different for Consumers?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

36

How About Renting Electric Karts or

Cars?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Shenzhen Subway -

2003

37

Taking The Metro?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Shenzhen Subway - 2017


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

39

• Bike-sharing combined online and physical assets into one

seamless consumer service for mobility.

• The same is happening in car rentals, car sales/leases,

ride-sharing, self-driving cars and other type of mobility.

• Didi Chuxing has just entered bike-sharing.

• Mobike has been bought by Meituan-Dianping.

• Ctrip and others have entered ride-sharing.

Bicycle Rentals Are Quickly Becoming

Part of a Mobility Super-Platform


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

40

• Software, data and digital tools are changing the frictional

costs and asset structures that have created boundaries

between industries.

• Tech companies Apple, Google and Baidu are starting to

make self-driving cars.

• Didi Chuxing is working with automakers to develop ride-

sharing cars.

• Alibaba is pioneering car test drive and sale vending

machines. And is putting Tmall voice into cars.

• Bike manufacturers never saw these competitors coming.

Industry Boundaries Are Moving and

Falling


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

41

Chart by McKinsey & Co


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

42

Workflow and Needs on the

Enterprise Side Will Likely

Determine Eventual Industry

Boundaries


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


• Combination of consumer products and services

(O2O, financial services, healthcare?)

• Combination of consumer products and

entertainment (i.e., Alibaba)

• Combination of e-commerce and social media

(Tencent, Pinduoduo, etc.)

Companies Not Crossing Industries Are At

Risk


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 3: Get Ready for Super-Platforms

– And for Industry Boundaries to Move

and Fall


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

45








Do Super-Apps Change Your Answers?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

46

• Initially:

• Digital disruption based on increased convenience and low prices.

• Plus subsidized prices in short-term (price effect).

• Scalable, very creative operations. Big deployment which increased

convenience of larger player (a money war + independent assets models).

• First mover – and against unsuspecting incumbents.

• Over time:

• Increase switching costs? Increasing consumer habit? Mostly with mobile

app / software.

• Economics likely viable. But too small an animal. Join a platform.

My Explanation for Bike-Sharing


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

47

It’s A Lot About Who Has the

Customers, Participation and Data.

Simple Services Are Pretty Easy to

Add to That.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 1: Give Customers EXACTLY What They

Want – Or Someone Else Will

Rule 2: Digitize and Re-Imagine Operations

ASAP




Transformation


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM







• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

50

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

52

• Putting a room in your apt on Airbnb is considered “sharing” in the most

traditional sense. It is a peer-to-peer transaction and uses an asset outside of

the traditional hotel market.

• But if you list 5 contracted apartments on Airbnb is that still sharing? It is

pretty similar to a small hotel or rental business.

• Are Spotify and other music or video streaming services sharing? The customers

are not buying the songs. Can you share products that are intangible like digital

media?

• Can you share labor instead of assets? If you contract a designer through a

company like Elance, is that sharing? It’s peer-to-peer.

• The sharing terminology is fuzzy.

• And sharing implies a physical product or asset, when so much of what is going

on in these businesses is with changing the available supply in a market

(including services, data, labor and intangible assets).

Forget the Term “Sharing Economy”


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

53

• The question a consumer asks him or herself at the point of purchase

is should I buy this or rent it? Or should I own it or access it?

• The decision between ownership and access is where consumer

behavior and business strategy diverge. Michael Porter (and others)

refer to these new companies as part of the “access economy”.

• If you want to own a bicycle, you consider price; style / look, brand /

reputation, premium vs. economy product; new vs. used, and so on.

What bikes are available at your local retailer (route to market)? What

are my storage requirements, frequency of usage; and so on?

• Bicycle manufacturers are structured to compete on these ownership

factors. So they focus on design capabilities, manufacturing cost and

scale, sales and marketing, securing access to retail space, etc.

Think Access vs. Ownership Businesses


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

54

• If you just want to access (i.e., rent) a bicycle for a while, you ask

what is the price per hour? Can I rent by the hour or do I need to take

the whole day? Is there a bike rental store near where I want to go?

Where do I drop it off when I’m done? Do I need a lock and helmet?

What if it breaks down? And so on.

• Consumers and businesses are mostly about price and convenience.

They can also sometimes compete on greater selection (think Spotify, a

type of access business based on large music selection).

• In all these new China sharing businesses, I actually think the right

question is access vs. ownership. And two common success factors are

price and convenience.

Think Access vs. Ownership Businesses


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

55McKinsey & Co

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

56

• In the past 1-2 years in China, we have seen the arrival of

smartphones, mobile payments, GPS and a very dynamic mobile app

ecosystem.

• And per the previous McKinsey slide, digital disruption can impact

demand, supply or both. And it can be mild or extreme in each of these.

• Much of what we have been seeing is China with companies like Didi,

Ofo, and the micro-rentals is new digital tools being used to disrupt

Chinese access businesses – and mostly via increased

convenience on the demand side. Plus low price.

These Are Mostly Digital Disruptors in

Access and Convenience


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

57

Question 1: Is this an ownership or access business?

Question 2: On the demand side, are new digital tools and processes

improving convenience and / or reducing price?

Question 3: On the supply side, are new digital tools and processes

uncovering latent supply and / or making capacity available in smaller

increments?

Question 4: On the supply side, is the business leveraging non-owned

assets? Are these large or small assets?

Question 5: Is there a network effect or other competitive advantage,

such as switching costs or economies of scale?

Five Questions for Mobike, Basketballs,

Airbnb, Umbrellas and Batteries


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

58

Question 1: Is this an ownership or access business?

• Most are access businesses. They all offer an alternative to ownership –

and they are directly competing against existing access businesses.

• These businesses also often impact ownership businesses. Will fewer

people buy apartments because they can now stay in Tujia and Airbnb?

Probably not. Will Chinese buy fewer cars because of Didi? Possibly. Will

Mobike have a major impact on bicycle ownership? Definitely.

• Short-term rentals of umbrellas, batteries and basketballs, don’t even have

existing competitors in the access economy. These are only competing with

ownership of these products.

These new access businesses are changing consumer behavior with

regard to some of these products.

Five Questions


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

59

Question 2: On the demand side, are new digital tools and processes

improving convenience and / or reducing price?

• On the demand side, digital disruptors “make it easy and make it now” (Jay

Scanlan, McKinsey). They unbundle. They remove the need to wait. They

remove the need to go to a store. They let you buy in smaller increments. These

are usually forms of increased convenience.

• They can also decrease price, which is discussed below.

• Convenience is where Mobike and Ofo have changed things dramatically and

permanently. People have discovered they really don’t want to store a bike in

their apartment. They don’t want to have to lock it up around town when they use

it. They don’t want to have to take it home later. Just try selling a traditional bike

rental contract in Beijing now. Their model also requires them to blanket cities

with bicycles (i.e., make it convenient).

Five Questions (cont.)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

60

• But taking a Didi or Uber vehicle is not usually cheaper than taking a taxi. In fact,

when Didi and Kuaidi first launched they offered taxi hailing, which was a pure

convenience offering.

• Similarly, Tujia and Airbnb are not actually cheaper in China as there are lots of

low cost hotels. Airbnb in San Francisco and Paris is a lot about being cheaper

than local hotels.



Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

61

Question 3: On the supply side, are new digital tools and processes uncovering latent supply and /

or making capacity available in smaller increments?

• On the supply-side, digitization can make accessible supply that was previously impossible or

uneconomic to provide.

• For example, Airbnb brought tons of apartments into the market that were too difficult and expensive to

contract individually. Similarly, Amazon Web Services has made huge new storage capacity available to

anyone who has any part of their business digitized (i.e., no more need to buy your own servers). The

big red flag on the supply side is any time you see an asset that is only partially used, such as idle cars,

empty bedrooms, half-full servers, and empty parking spaces.

• The supply side is where we see the big difference between Mobike / Ofo and Didi / Uber. Didi is

seriously disrupting both demand and supply. It is bringing private cars (i.e., underused assets) into

the market in ride sharing (not in taxi hailing). And it is disrupting the demand side, as mentioned above,

via increased convenience. Plus it is then making a new market between these supply and demand

changes.

• Mobike, Ofo and most of the micro-rentals (basketballs, batteries, etc.) are not bringing unused supply

into the market. They are buying new bicycles themselves and making them available in smaller

increments. They do this by focusing on smaller assets (you could never buy 10,000 cars and put them

around Shanghai) and then using GPS, smartphones, smart locks and kiosks.



Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

62

Question 4: On the supply side, is the business leveraging non-owned

assets? Are these large or small assets?

• Does the company have to own the assets or can it just leverage them from

others? Not having to own the assets is one of the reasons the asset-light

economics of Uber, Airbnb and Didi are so powerful.

• Mobike and the micro-rental businesses get around this problem to some

degree by focusing on small, fairly inexpensive assets. They can actually scale

up pretty fast but placing bicycles, maintenance and theft are problems.



Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

63

Question 5: Is there a network effect or other competitive advantage, such as

switching costs or economies of scale?

• The competitive advantage most software companies and other platform-type

businesses are usually going for a network effect. Most of the most ridiculously

profitable companies have this (Tencent, Alibaba, Alipay, Airbnb outside of China,

Uber, Microsoft, Google, Facebook, Match.com, Expedia (in hotels, not airlines) and

others).

• Didi is mostly a two-sided network which means it has to have both drivers and rider

populations. Capturing both groups is very hard for a new entrant against an

entrenched player like Didi. Plus the larger the captured populations, the superior the

service (to a point).

• Mobike, ofo and the new micro-rental businesses lack this. They are not multi-sided

platforms and they do not have network effects. They are traditional rental

businesses that have become much more convenient by virtue of new digital

tools. So they are very disruptive to existing businesses (both ownership and access

types), but they, as of yet, don’t have a clear competitive advantage.



Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

64

Forget the sharing economy.

What we are seeing is digital

disruption in the access economy –

mostly by increased convenience.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM







• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 1: Give Customers EXACTLY What They

Want – Or Someone Else Will

Rule 2: Digitize and Re-Imagine Operations

ASAP



3 Rules for Chinese Digital

Transformation


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


• Network Effects




and / or


Main Ideas


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

My Opinion

80

• Absent a competitive advantage, business is usually an endless

marathon in operational scale, effectiveness and efficiency.

• Digital is destroying some traditional competitive advantages and

creating some new ones.

• This operational marathon is being combined and sometimes replaced

with marathons in:

• Rate of learning

• Innovation (tied to rate of learning)

• Ecosystem shaping and management

• The best players are fast in their marathons but also have strong

competitive advantages that give them structural advantages in these

races.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

New Competitive Dimensions (BCG)

81

Classical models of competition were based on:

- Competition advantages in pipe businesses in well-defined industries.

- Ongoing competition based on operational scale and efficiency in pipe business in well

defined industries.

- Lots of analysis, planning and execution.

- Coasean transaction costs led to concentrating of assets in vertically integrated firms.

This approach is having more and more problems.

- Does not really address platforms. Definitely not digital platforms. Nor the ability to

shape ecosystems. Michael Porter left out complements.

- Does not address decreasing transaction costs that weaken Coasean logic.

- Does not address the innovation aspects of both pipes and platforms.

- Does not address the increasing speed and dynamic nature of business. The need to

be adaptable.

- And ignores the world has a lot more economic, technological and political uncertainty.

- Overall, there are shorter product lifecycles and changing business models.

Competition success has become less permanent.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

New Competitive Dimensions (BCG)

82

In many businesses, you now need to have the ability to:

Compete in ecosystems.

• You can be a platform. You can do viral and other network-centric strategies.

• Pure digital platforms grow the fastest. Tangible aspects can slow this. But can also protect.

• Transaction costs are dropping and disrupting industry barriers.

• The distinction between the firm and ecosystem is blurring.

• You can sometimes shape the ecosystem. Can influence development of the market in your favor.

This requires working with other ecosystem stakeholders.

• What is your role? Not everyone can be the orchestrator.

• Cooperation vs. competition.

• Strategy based on external orientation, common platforms, co-evolution, indirect monetization,

emergence

• You may need to create value for the ecosystem broadly, not just yourself.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Competing on Rate of Learning (BCG)

83

This is a good adaptation to increasing uncertainty. It also helps with rapid product

innovation and market changes.

• Learning Type 1: BCG’s Bruce Henderson showed marginal production costs

decrease with accumulated experience. Learning to improve a static process (for a few

products). This is traditional learning.

• Example: the Model T cost fell about 25% for every doubling of cumulative

production (due to cumulative experience).


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Competitive on Rate of Learning (BCG)

84

Type 2: Dynamic learning.

• You learn to create new products or the next generation of products all the time.

Jump to the new curve before old one has played out. This has always existed.

Now it is just faster. Netflix jumping from DVD to streaming.

• You need to do both type 1 and 2 of learning.

• This naturally ties to data-driven innovation. See TMIC.

Type 3: Sensors, AI and real-time reactions.

• Learn at the speed of algorithms. Time scale is really compressed.

• Need to adopt digital tools related to learning: AI, data, sensors, ecosystem /

collaborations, and automated decision-making.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Competing on Rate of Learning (BCG)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Competitive on Rate of Learning (BCG)


• Autonomous Learning Loop:

• How does learning relate to making decisions? Automated execution? Changing

pricing instantly.

• Traditional hierarchies make decisions slowly.

• Virtuous cycle: get data, learn, decide, sell more, get more data. Hands off the

wheel at Amazon. Self-tuning at pace humans cannot do.

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Human + Machine Learning?

87

• Humans need to think faster (dynamic learning, algorithmic) but also longer-term.

• Don’t just get to top of local peak with fine-tuning / data. Also may need intuition to

move to new location. See the long-term threats coming. They can be social,

regulatory, consumer.

• Humans: set the end points and goals. Create the guardrails for the machine. Use

imagination to create new products, create the human-machine platform.

• Humans focus on discovery and adaptation more than forecasting, planning and

execution. Good for dynamic & uncertain times.

• Data can do correlation. Cannot do imagination and most causal inference.

• Need integrated learning architecture. Learn at the rate of data, not organizational

hierarchy. Increasingly automated learning and decision-making.

• Imagine and harness new ideas rapidly.

• Old learning advantage was from more volume. Now from more data.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Human + Machine Learning (BCG)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM







• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Level 1: Digital is overwhelmingly granular.

• There are lots of new digital and data technologies being developed

and these can be used in lots of ways within businesses.

• The best approach to digital strategy is to just look at the use cases.

McKinsey has good reports that take this bottoms-up approach.

• Normal dynamic competition.

• Level 2: Bubbling up out of all these use cases are at least 6 digital

superpowers that can happen that really change a company.

• Level 3: At an even higher level, we can see platforms evolve in certain

patterns. Becoming conglomerates and other powerful structures.

• So you want to look at all of this at at least 3 levels.

Digital Transformation Happens At At 3

Least Levels


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

6 Digital Superpowers

91

1. Dramatically improved user experience and journey. You need sufficient delta of

improvement (vs. pain of adoption)

2. Creates a platform (and gets complements or soft MSP advantages). Including without

NE.

3. Captures network effects, including data network effect. Including 1-sided without MSP.

4. Captures other competitive advantages - including switching costs and digitally-

enhanced share of consumer mind (habits, behavior, etc.).

5. Viral or other powerful customer acquisition and/or retention mechanism.

6. Scalable. Especially if gets massive demand-side scale. Global scale is best.

• Also awesome is recurring revenue, freemium and pre-pay if you can get it. Slack has this and all of above.

• B2B criticality is also great (Microsoft has)

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Demand-Side

Scale (early)

Phase 1: Build Basic Demand-Side Scale Around

1-2 Core Interactions.

• Users

• Participation

• Data

Network Effects:• Primary Interactions

Merchants / Brands

/ Online Retailers

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Platforms Are Made of Components

93

• User groups

• Key interactions – is the business. Between user groups.

• Think about quality and quantity of these interactions.

• Can be multiple types.

• LinkedIn was professionals connecting with professionals, then job-

seekers and recruiters. Now readers and influencers.

• Network effects and demand economies of scale.

• They run the business for you.

• Can be network effects and data network effects.

• Machine learning -> winners get data -> better at machine learning

• Other competitive advantages.

• Revenue advantages. Such as switching costs and share of the consumer

mind.

• Cost advantages

• Government advantages

• Soft MSP advantages. Such as subsidies, proprietary data, non-NE feedback loops

and linked business models.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Demand-Side

Scale (early)

Phase 1: Build Basic Demand-Side Scale Around

1-2 Core Interactions.

• Users

• Participation

• Data

Network Effects:• Primary Interactions

Merchants / Brands

/ Online Retailers

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Data NE

Demand-Side

Scale (Middle)

Phase 2a: Keep Adding Demand-Side Scale.

Add Other Advantages.

• Users

• Participation

• Data

• Share of consumer mind

• Switching costs

• Limited options

• Subsidized pricing. Free?

Chicken-and-egg? Data?

• Search costs

• Switching costs

• Limited options


Chicken-and-egg? Data?Network Effects:• Primary Interactions

Merchants / Brands

/ Online Retailers

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Data NE

Demand-Side

Scale (Later)

Phase 2b: Keep Building Demand-Side

Scale. Add New Users and Use Cases.

Merchants / Brands /

Online Retailers

• Users

• Participation

• Data

Additional User

Groups• App Developers

• Content

Creators

• Advertisers

Network Effects:• Primary

Interactions

• Additional

interactions


• Switching costs

• Limited options



• Search costs

• Switching costs

• Limited options



• Search costs

• Switching costs

• Limited options



Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers


Online Retailers

• Users

• Participation

• Data

Demand-Side

Scale

Phase 3a: Build Supply-Side Scale

Supply-Side

Scale (initial)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery(?)• Economies of scale

• Production cost advantages

(IP/Tech, location/transport)


(patents, licenses, other)

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Open to MarketOpen to Market

Online Retailer

or Marketplace


Consumers

Merchants / Brands

/ Online Retailers

• Users

• Participation

• Data

Demand-Side

Scale

Phase 3b: Keep Building Supply-Side Scale.

Digitize Capabilities and Invert.

Supply-Side

Scale (later)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery(?)• Economies of scale

• Production cost advantages

(IP/Tech, location/transport)


(patents, licenses, other)

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Online Retailer

or Marketplace


Consumers


Online Retailers

• Users

• Participation

• Data

Demand-Side

Scale

Supply-Side

Scale (later)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery(?)

Phase 4a: Exploit and Innovate Rapidly (Musk Strategy).

Additional

User Groups• App

Developers

• Content

Creators

• Advertisers• Identify and exploit new

services, products and use

cases.

• Horizontal attacks

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Online Retailer

or Marketplace


Consumers


Online Retailers

• Users

• Participation

• Data

Demand-Side

Scale

Supply-Side

Scale (later)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery(?)

• Identify and exploit new

services, products and use

cases.


• New platforms

• Linked businesses

Additional

User Groups• App

Developers

• Content

Creators

• Advertisers

Complementary

Platforms

Phase 4b: Add Platforms and Linked Biz

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM



Consumers


Online Retailers

• Users

• Participation

• Data

Demand-Side

Scale

Supply-Side

Scale (later)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery

• Identify and exploit new

products, services, business

models and use cases.


Additional

User Groups• App

Developers

• Content

Creators

• Advertisers

Phase 5: New Retail

Physical

Retailers

Online Retailer

or Marketplace

Physical Retail

• Search costs

• Switching costs

• Limited options



Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

When In Doubt, Check Who Has the

Most Users, Participation and Data on

the Demand-Side?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Marketplace –

Taxi Hailing &

Ride-Sharing


Chinese Consumers

/ Riders

Drivers and Taxis

Users

Participation

Data

Demand Side

Scale

Example Didi: Phase 1

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Marketplace –

Taxi Hailing &

Ride-Sharing


Chinese Consumers

/ Riders

Drivers and Taxis

Users

Participation

Data

Demand Side

Scale

Supply Side

Scale

• Marketing

• Tech / Big

Data / AI

Didi Alliance

Open Services

to Market?

Example Didi: Phase 2-3

Driver Services

(Xiaoju)

Open Services

to Market

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Marketplace –

Taxi Hailing &

Ride-Sharing


Chinese Consumers

Drivers and Taxis

Users

Participation

Data

Data NE?

Demand Side

Scale

• Identify and exploit

new services


Supply Side

Scale

Complementary

Platforms

Example Didi: Phase 4?

• Driver services /

Xiaoju

• Bike-sharing?

• Marketing

• Tech / Big

Data / AI

Didi Alliance

Open Services

to Market

• Autonomous vehicles?

• Integration with smart

cities?

• Additional local services?

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Services underway

• Online bookings and payments

• Information and communication

• OTC products and delivery

• Services emerging

• Online consultation for basic care.

• Online pharmacy and delivery?

• Game changer services

• Insurance / PBMs?

• More complicated care online.

• Government portal?

Ping An Good Doctor


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


Consumers

Merchants / Brands

Users

Participation

Data

Data NE

Demand Side

Scale

• Content

Creators

• Advertisers

PingAn Good Doctor: Phase 1

• Hospitals /

Clinics

Marketplace,

Consultations,

Coordination,

Innovation

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Marketplace,

Consultations,

Coordination,

Innovation


Consumers

Merchants / Brands

Users

Participation

Data

Data NE

Demand Side

Scale

Supply Side

Scale

• Marketing

• R&D

AI + Team

Online

Consultations

• Content

Creators

• Advertisers

PingAn Good Doctor: Phase 2

• Hospitals /

Clinics

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Launched in 2013 as money market fund. Easy to transfer, good

online services, no minimal amounts.

• Over 80M people signed up in about a year.

• Today, over $165B in assets.

• Expanding into financial services, global payment network,

insurance products, private banking, etc. Very unclear what this is

going to be.

• Tencent Wallet has taken about 40% of the payment business,

mostly from Alipay.

• In 2018, closed a private fund round at $150B

Alibaba Yu’E Bao

110


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM







• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Case: Didi vs. Uber vs. Geely


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

113

• Didi Dache, founded 2012 by Cheng Wei (previously 8 years at Alibaba). Cabs

were difficult to catch, particularly during rush hour. Began initially with taxi-

hailing.

• Backed by Tencent in 2012. Competitor Kuadi Dache backed by Alibaba.

• In 2014, Jean Liu (Liu Qing), a former Goldman Sachs Asia managing director

and daughter of Lenovo founder, joined the company as its COO. She became

president of the company the following year.

• A price war (subsidies for drivers) with Kuaidi led to a merger in 2015. Didi had

55% of market and Kuadi had 45% of market.

• By September 2015, the company had a market share in private cars of 80%

and in taxis of 99%.

• In 2015, Didi Kuaidi invested in Grabtaxi, a taxi-hailing app in Southeast Asia.

Group 1: Didi Chuxing


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

114

• Today, Didi is the world's leading and most valuable(?) ride-sharing service. 550

million users in 400 cities.

• Employees 10,000(?)

• Didi Taxi: about 2 million drivers operating in +400 cities in China and Brazil;

partnered with 500 taxi companies to upgrade services.

• Didi Express: operating in +400 cities with an ExpressPool option. Didi

ExpressPool carries over 2.4 million daily rides.

• Didi Premier: upgraded brand in 2018, accompanied by a new logo and a full

suite of product and service upgrades.

• Didi Hitch: A ride-sharing service. During 2018 Chinese New Year holiday,

DiDi's Inter-City Hitch provided nearly 30.67 million passenger trips.

• Enterprise Solution: about 170,000 corporate clients.

Group 1: Didi Chuxing (continued)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

115

• Didi Bus: Launched initially in Beijing and Shenzhen as a WeChat-based trial in

2015. In Beijing, Didi took over Kaola Bus (考拉班车) fleet and operation in

September 2015. By the time of Didi Bus's official launch in October 2015, Didi

Bus was providing 1,500 daily rides and transporting approximately 500,000

daily commuters.

• Didi Minibus: DiDi started to offer minibus rides in December 2016, aiming to

provide “last three-kilometer” connection to and between public transport hubs.

• Didi Select: over 1 million rides a day.

• Bike-sharing: DiDi has added bike-sharing service from ofo to its app since

April 2017. On 17 January 2018, DiDi launched its own bike-sharing platform,

which integrates Ofo, Bluegogo, and Didi-branded bikes.

Group 1: Didi Chuxing (continued)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

116

• Entered China in late 2014. Led to two years of fierce competition with lots of

subsidies. Uber invested approx. $2B.

• Early 2015:

• Didi and Kuadi merged. After a long price war.

• People’s Uber launched. Ride-sharing (technically illegal) and not taxi-

hailing. Helped Uber grab a chunk of market share from Didi.

• Co-Founder Travis Kalanick frequently traveled to China.

• Uber China staff of approximately 500 (Didi approx. 4,000). Run by Travis

from San Francisco without China head. Although Jean Liu cousin, Zhen Liu,

was a vice president and spokeswoman for Uber China.

• Summer 2016, Uber sells to Didi. Receives 20% and $1B equity investment.

Group 2: Uber China


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

117

• Founded in1986 as a refrigerator maker with money borrowed from family.

• Manufactured motorcycles in the mid-1990s. Small van production began in 1998,

and a year later, it received state approval to manufacture automobiles. Car

production began in 2002. IPO in Hong Kong in 2004.

• Bought Swedish Volvo in 2010 from Ford. Acquired British taxi maker The London

Electric Vehicle Company in 2013. Acquired a majority stake in British sports

carmaker Lotus Cars in 2017.

• Purchased a 9.7% stake in Daimler-Benz, parent of Mercedes-Benz.

• In 2010, sold 415,286 units from its 680,000 units/year production capacity. Giving

Geely a 3% market share.

• In 2014, it had a reported 900 retail outlets.

• Sells passenger cars under five marques currently: Geely, Lynk & Co, Volvo, through

its Swedish subsidiary, Volvo Cars, Lotus and Proton.

Group 3: Geely


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

118








Question: What Do You Do?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


• One week after merging with Uber China, Didi and Softbank invest more in

Grab Taxi in SE Asia. At that time, SE Asia was mixed market with Grab,

Uber and Go-Jek.

• Didi does large fund raises. Amasses +$10B in cash.

• Builds the anti-Uber alliances with Ola in India, 99 in Brazil, Lyft in USA,

Grab in SE Asia and Taxify in Eastern Europe.

• Uber has internal management problems. Focused on IPO. Retreats

internationally.

Dominant in China, Didi Goes Global

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


• Significant money into big data and AI.

• Assembles 31? Automakers in Didi Alliance. Focused on building

ride-sharing vehicles. Discussion of EV and autonomous vehicles.

• Launches Didi driver solutions. Offering suite of financing,

maintenance and other services to +30M drivers.

• Begins to integrate with local cities. Data sharing. Smart city

initiatives like street lights, lane changing, driver notifications.

• Begins assembling super mobility app that covers ride-sharing,

taxi-hailing, metro, car pooling, bicycles, etc.

Didi Deepens Mobility Services

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

121

• Didi Chuxing with Chinese traffic management authorities has launched “Didi

Smart Transportation Brain.”

• Integrating Didi’s traffic data and data resources from local government and

business partners.

• Real-time data leveraging cloud computing and AI-based technologies

provide cities with transportation infrastructure improvements, including traffic

flow measurements, “Smart Traffic Signals,” reversible lanes, and traffic

management programs for maintenance scheduling and system

assessments.

• Adopted by +20 Chinese cities and guided by Discover, Decide and Deploy.

• In Jinan, Smart Traffic Signals have been installed at 344 road intersections.

Average traffic delays have been shortened by 10% to 20%.


Didi’s Smart Transportation Brain

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM







• Break



• Review

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


• Network Effects




and / or


Main Ideas


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

My Opinion

124

• Absent a competitive advantage, business is usually an endless

marathon in operational scale, effectiveness and efficiency.

• Digital is destroying some traditional competitive advantages and

creating some new ones.

• This operational marathon is being combined and sometimes replaced

with marathons in:

• Rate of learning

• Innovation (tied to rate of learning)

• Ecosystem shaping and management

• The best players are fast in their marathons but also have strong

competitive advantages that give them structural advantages in these

races.


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Level 1: Digital is overwhelmingly granular.

• There are lots of new digital and data technologies being developed

and these can be used in lots of ways within businesses.

• The best approach to digital strategy is to just look at the use cases.

McKinsey has good reports that take this bottoms-up approach.

• Normal dynamic competition.

• Level 2: Bubbling up out of all these use cases are at least 6 digital

superpowers that can happen that really change a company.

• Level 3: At an even higher level, we can see platforms evolve in certain

patterns. Becoming conglomerates and other powerful structures.

• So you want to look at all of this at at least 3 levels.

Digital Transformation Happens At At 3

Least Levels


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

MSPs vs. Pipelines (Platform Revolution)

126

1. One main customer group

2. Asset value increases as it moves down the

pipeline.

3. Through tightly controlled process and

assets (by contracts).

4. Management focuses on increasing the

efficiency and returns on internal assets.

5. Scales by internal actions such as acquiring

more assets or customers. Lot of attention

to supply-side economies of scale. Driven

by management.

6. Owned or contracted assets and products /

services. Centralized ownership, profit and

control.

7. Challenges: Well-known. See any 10k Risk

section.

1. Multiple user groups

2. Value is created by interactions of the user groups on the

platform

3. Provides open architecture and governance (rules for

users, incentives for participation).

4. Management orchestrates the ecosystem and its assets.

You focus on ecosystem assets (not internal assets). You

manage external actions / processes / interactions. If you

don’t own assets then need data to manage this.

5. Scales without effort. Driven by external participants and

their activity.

6. Decentralized assets, products and risks but centralized

ownership, profit and control

7. Challenges:

1. Need to decide the controls point(s) and what to

monetize (Apple lets developers take ecosystem

profits).

2. You want everyone to keep investing in the platform.

3. They can bait and switch by changing rules after

built biz on platform.

4. Backlash to centralized governance growing. May

need distributed governance (blockchain)

5. Some platforms enable you to build (apple,

Microsoft) others are channels and gatekeepers to

customers (Facebook)

Pipelines (VI) Platforms (MSP)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM


1. Marketplaces and Transaction Platforms

2. Coordination and Standardization Platforms

3. Payment Platforms

4. Innovation (and Audience-Builder) Platforms

5. Learning Platforms

• These re not mutually exclusive. Each platform can be a combination of users,

interactions and feedback loops. And you can combine them.

• Payment platforms are probably a type of coordination but pulled it out as

separate.

5 Common Types of Platforms

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

128

Attractive But Dangerous Economics of

Information / Digital

• Zero marginal production costs

• Non-rival goods

• Low distribution costs

• Bundling and versioning

• Complements and consumer surplus


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Traditional Competitive Advantages (1 of 2)

129

1. Consumer – captive customers / control over pricing• Share of consumer mind or buying habits

• Switching costs (i.e. training costs)

• Searching costs (i.e. brand names)

2. Producer – proprietary production capability / manufacturing cost advantages• Labor costs

• Proprietary technology

• Lower cost of inputs

• Special resource

• Location or transportation

3. Scale economies – lower average costs at higher volumes• Manufacturing

• R&D

• Marketing

• Distribution / logistics

4. Government• License

• Regulation (antitrust, zoning, environment)

• Patents

• Tariffs and quotaswww.jeffreytowson.com

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Traditional Competitive Advantages (2 of 2)

130

5. Network economics– Demand side economies of scale.• One sided networks – Facebook, WeChat, telephone

• Two sided networks – UnionPay, American Express, Apple App Store

• Combos – Tencent multiplayer gaming is one sided and two sided.

• Data network advantages – insurance pricing, personalization / curation

6. Efficiency of Scale– One dominant company in small market – with high

capital costs and history of attacking new entrants.• Not a strict CA. But strong disincentive to new entrants.

• The only hospital or powerplant in a small town. High capital costs, limited

market and one dominant, entrenched player.

• Usually not (but not always) a competitive advantage:

• Most brands. You can buy a brand with cash. It’s an asset.

• Smarter. This can be copied.

• Expertise. Can be copied over time.

• Lower cost of capital – nope.

• Lower cost of labor – nope. Transitory.

• Most government regulations and tariffs


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Digital Competitive Advantages

131

1. Revenue Advantages

• Share of consumer mind – software excels at hacking behavior. Gamification.

Habit-creating. Dopamine hits. Personalization and curation.

• Switching costs – Rare for consumers. Stronger for platforms, merchants,

content creators, B2B, app developers, etc. Integration of workflow can be

powerful.

2. Production Cost Advantages

• IP / tech cost advantage. Code written over time. Growing with AI and

algorithms.

• Special resource: Data. Partnerships.

3. Economies of Scale – Cost Advantages

• Marketing

• R&D

• Web services / tech – particularly if open to market

• Logistics / delivery – particularly if open to market

• Medical teams? Driver services? Auto alliance?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Digital Competitive Advantages (cont.)

132

3. Government. Licenses. Access to data / smart cities.

4. Network Effects

• Network effects in main platform.

• Data network effect

• Emerging: AI? Autonomous vehicles?

5. Efficiency of Scale

Other

• MSP soft advantages. Subsidized or free pricing. Chicken-and-egg

• Data soft advantages

• Complementary platforms

• Linked business models: Customers, data, capital

• Combined services and digital conglomerates

• Platform vs. product / pipeline

• Platform vs. platform

• Platform vs. digital conglomerate


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

6 Digital Superpowers

133

1. Dramatically improved user experience and journey. You need sufficient delta of

improvement (vs. pain of adoption)

2. Creates a platform (and gets complements or soft MSP advantages). Including without

NE.

3. Captures network effects, including data network effect. Including 1-sided without MSP.

4. Captures other competitive advantages - including switching costs and digitally-

enhanced share of consumer mind (habits, behavior, etc.).

5. Viral or other powerful customer acquisition and/or retention mechanism.

6. Scalable. Especially if gets massive demand-side scale. Global scale is best.

• Also awesome is recurring revenue, freemium and pre-pay if you can get it. Slack has this and all of above.

• B2B criticality is also great (Microsoft has)

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Rule 1: Give Customers EXACTLY What They Want – Or

Someone Else Will

Rule 2: Digitize and Re-Imagine Operations ASAP

Rule 3: Get Ready for Super-Platforms – and for Industry

Boundaries to Move and Fall


Transformation


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Demand-Side

Scale (early)

Phase 1: Build Basic Demand-Side Scale

Around 1-2 Interactions.

Merchants / Brands

• Users

• Participation

• Data

Network Effects:• Primary Interaction

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Data NE

Demand-Side

Scale (Middle)

Phase 2a: Keep Adding Demand-Side

Scale. Add Other Advantages.


Retailers

• Users

• Participation

• DataOther Revenue-Side Adv


• Switching costs

MSP Adv


Other Revenue-Side Adv

• Search costs

• Switching costs

• Limited options

Network Effects:• Primary Interaction

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Data NE

Demand-Side

Scale (Later)

Phase 2b: Keep Building Demand-Side

Scale. Add New Users and Use Cases.


Retailers

• Users

• Participation

• DataOther Revenue-Side Adv


• Switching costs

MSP Adv


Other Revenue-Side Adv

• Search costs

• Switching costs

• Limited options

Additional User

Groups• App Developers

• Content

Creators

• Advertisers

Network Effects:• Primary

Interaction

• Additional

interactions

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers


Retailers

• Users

• Participation

• Data

Demand-Side

Scale (initial)

Phase 3a: Build Supply-Side Scale

Supply-Side

Scale (initial)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery

• Physical vs. intangible

capabilities?

• In-house vs. partnership?

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Open Services

to Market

Open Services

to Market

Online Retailer

or Marketplace


Consumers


Merchants / Brands

• Users

• Participation

• Data

Demand-Side

Scale (later)

Phase 3b: Keep Building Supply-Side

Scale. Digitize Capabilities and Invert.

Supply-Side

Scale (later)

• Marketing

• R&D

IT / Web

Services

Logistics and

Delivery

• Physical vs. intangible capabilities?

• In-house vs. partnership?

• Other cost adv: Economy of scope,

production cost, location & transport,

IP/Tech,

• Other adv: Patents, government regs

and limits

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Merchants / Brands

Users

Participation

Data

Data NE

Demand Side

Scale


new services


Supply Side

Scale

• Marketing

• R&D

Tech / Web

Services

• App

Developers

• Content

Creators

• Advertisers

Logistics and

Delivery

Open Services

to Market

Open Services

to Market

Phase 4a: Exploit and Innovate Rapidly

(Elon Musk Strategy).

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Merchants / Brands

Users

Participation

Data

Data NE

Demand Side

Scale


new services


Supply Side

Scale

• Marketing

• R&D

Tech / Web

Services

• App

Developers

• Content

Creators

• Advertisers

Complementary

Platforms

Logistics and

Delivery

Open Services

to Market

Open Services

to Market

Phase 4b: Add Platforms and Linked Biz

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

Online Retailer

or Marketplace


Consumers

Merchants / Brands

Users

Participation

Data

Data NE

Demand Side

Scale


new services


Supply Side

Scale

• Marketing

• R&D

Tech / Web

Services

• App

Developers

• Content

Creators

• Advertisers

• Creating new use cases

and business models

• Bringing physical

retailers (and data) onto

platform

• Adding physical assets

to supply side

Complementary

Platforms

Logistics and

Delivery

Open Services

to Market

Open Services

to Market

Phase 5: New Retail

Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

LinkedIn: Jeffrey Towson

WeChat – a555666777aa

143

My Contact Information


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

144

• Mario Gabelli and GAMCO

• Private Market Value and Catalysts

• Break – 15 min

• Pop Quiz

• Seth Klarman and Baupost Group

• Complicated Sits and FEMs (Forced / Emotional /

Mindless Sellers)

• More Baopost Rules and Cases (Optional)

• The Secret to Happiness


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Sending out resumes

• Calling up friends of friends and asking for work

• Networking around randomly

145

Career Stuff That Doesn’t Work


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• By William Duggan, Author and CBS professor.

• Focus on an idea. Something you care about. Something that

is valuable. Become a serious thinker on this subject. Such as:

• Chinese real estate

• Technology

• Healthcare policy

• Whatever

• Finding good stocks

• Private equity deals

146

I = IDEAS


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Working on ideas will lead to meeting people who also

care about that subject.

• You will meet people all the time. Conferences. Friends.

Emailing people randomly if you read about them. You can

cold call people about the topic.

• They will want to talk with you. And you can build a

relationship with them.

147

P = PEOPLE


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

• Out of this big network of people and ongoing

discussions of the idea, opportunities will follow.

• As you talk and develop ideas, jobs, contracts, and

investments will just fall out all the time.

148

O = OPPORTUNITIES


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

149

“It takes very little to provide for

what you need in life. So you have

no excuse for not doing something

you really love.”

- Warren Buffett (approximately)


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

150

But what if you don’t really love

anything?


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

151

My default strategy: Follow the

best and brightest


Wo

rkin

g D

raft -

La

st M

od

ified

04

/23

/20

08

11

:49

:19

AM

Prin

ted

4/2

1/2

00

8 4

:27

:01

PM

152

“Don’t wait too long to start

enjoying your life”

- CBS Professor


Documents

Dynamic Competition in Digital Transformation and Disruption · • In 1977, deal with Schwinn to manufacture bikes as an OEM, sold exclusively under other brand names. • In 1980,