Every now and then there’s a new revolution: the new replaces the old because it’s better.
We call them economic cycles, technological disruption or many other names, depending on the industry.
We call it technological disruption when some advanced technology is implemented in a field, and it completely replaces the older way of doing things.
We don’t use landlines anymore, we use the mobile phone. We don’t use the TV that much, we use YouTube mainly. You know the examples.
However, every time a newer solution comes into place, it usually looks (at least in the beginning) like the profit margins are going to be cut down. You create WhatsApp, thus replacing the mobile operator’s text services and now you earn… well you don’t earn as much as them.
Sure, there are examples where the profit margins are increased, but more often than not, you:
- Cut off the older way of doing things
- Have a smaller profit margin
- In time, because of the newer technology, find the new sectors where this upgraded technology you’re using can make things better
- Finally have a bigger profit margin
In some rare cases, step #2 is skipped.
What about the future?
Anyways, where I’m trying to get with this thing is this: it’s obviously easy to point these things out retrospectively — impossible to know the future holds.
But I believe cryptocurrencies or the blockchain are going to allow us to do these things.
The reason why the bigger, older players in an industry — the Goliaths — tend to always overlook the Davids is because of that smaller profit margin.
“These guys have no chance with their new Airbnb crazy renting system… The profit margins are too damn low!”– Probably the hotel industry Goliaths
“This Spotify thing can’t really make any money… We, ourselves, are struggling to make more! Why would we join them for a smaller profit margin?”– Probably the music industry Goliaths
The Davids, though, have either the vision or fewer things to lose. Either:
- That smaller profit margin is enough for them since they’re Davids in the first place
- They may have the vision to see past that smaller profit margin and get to a point where, just for the sake of an example, yes — WhatsApp has smaller profit margins… for charging per use. But for advertising revenue, it dwarves what SMS services or yearly subscriptions can ever do.
There’s one thing I need to highlight. Yes, disruption happens — but it can also happen in a place where these newer, better things are not only given a chance, but they’re favoured.
The smartphone wasn’t hated for so long. Yes, the initial iPhone was doubted, but there wasn’t that much backlash, like in some other cases.
What’s the common thread? How can we spot what’s good, despite the public sentiment — whether there’s backlash or love for a certain thing?
The answer is as old-school as it gets and I’m not saying anything new with this line: whatever gives more value for the people will win. Airbnb, Spotify and all those Davids gave more value to the people
I mentioned it earlier. I think cryptocurrencies, although doubted, criticized and reviled, give more value to the people.
I think it enables indeed lower profit margins — but that’s simply because we’re in the beginning. In the future, when other technologies advance as well, those who have had the vision to commit to these “lower profit margins” will reap the benefits of the crop.
Take for instance this coin called Primalbase Token. What they’re doing is WeWork, but next level. WeWork, but with more value to everyone.
They’re renting offices and hot desks in big office buildings. You can pay per day to get access to your office/hot desk.
However, you can also buy their token and thus become a lifetime member. Meaning:
- You can go in and out these offices for free, since you have the token
- Alternatively, you can “rent” your membership, in the sense that you make money from those people who want to rent an office/hot desk every day.
Let me explain that #2 for those who might not get it. A PBT is at the moment $1300, but it’s been as high as $5000 or even $9000. If you buy one, you have a lifetime membership.
If you plan on using your spot, you use it and that’s it. But if you plan to not do it, you can offer your membership for “rent”.
People pay every day those £5, £9 or £20 to rent daily, since they don’t want to commit to a lifetime membership. Those £5, £9 or £20 go to your pocket. Not only you make up for part of your investment but there’s also the speculative game of the PBToken’s value.
You can’t rent a place through WeWork and own a part of WeWork.
You can do it through Primalbase Token, or PBT.
Yes, WeWork would cry that the profit margins are lower and maybe even go as far as saying “these guys have no idea what they’re doing and they’re going to starve”.
But I beg to differ, since there’s more value to the people — in the long run.
What can we get out of this?
I’m writing these things down in the hope that I won’t be arrogant enough to one day say “These guys have no idea what they’re doing — they’re going to starve because their system leads to lower profit margins”.
Or if I do say that, at least click instantly and remind myself of this article.
What, I think, we need to do is keep our eyes open and all that classic advice.
But also pay attention to our own arrogance… and complacency, once we reach a comfortable point.
And besides that, just like I’ve mentioned in past articles, all our successful ancestors have had the ability to see. I wish you the ability to see as well the value that’s in it for the people.
About Ch Daniel
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