Disintermediation - Getting Rid of the Middle Man

The new Internet economy is all about getting rid of the middle man. Part of it is about eliminating information asymmetry, so that all parties in the transactions have equal grounds, like real-estate sales (Zillow) and car sales (TrueCar) eliminating the privileged information withheld by the sales agents. Part of it is about providing an efficient virtual market place where buyers and sellers can mingle with minimal friction (Ebay). And yet other part of it is about new technological innovations enabling novel distribution mechanisms previously unthinkable (BlockChain).

Here are a few more examples that either have happened since the dawn of the Internet age, or emerging as new and powerful disruptive forces. 

• Newspapers - Middle man that edits and disseminates noteworthy information, now partially eliminated by Twitter and Bloggers (Huffington Post).
• Book publishers - Middle man that selects and distributes original writing from otherwise unknown authors, now partially replaced by self-publishing houses Lulu and Amazon Kindle.
• Taxi - Middle man that employs drivers to transport people, now threatened by Uber that connects drivers and passengers directly. 
• Hotels - Middle man that manages empty rooms to host travelers, now partially replaced by Airbnb that connects unused room owners with travelers directly.
• Schools - Middle man that employs teachers to educate students, now threatened by online P2P education services like Coursera and MIT Open Course Ware, which connects people desired to learn with teachers and knowledges.
• Cable TV - Middle man that licenses video entertainment and redistributes to consumers, now threatened by both new distribution technologies (IP streaming) and bundling business models from Netflix, as well as original content owners starting to serve consumers directly as streaming technologies mature, such as HBO, CBS, Univision, NBA Sports and Starz.
• Banks - Middle man that makes a living by collecting deposits from people that have extra to save and lending it to people who needs cash, now threatened by peer-to-peer lending such as Lending Club, peer-to-peer payment Paypal, and crowd funding Kick Starter.
• Credit card - Middle man that runs proprietary payment networks and charges on-average 3% transaction fees for the convenience of money transaction between consumers and merchants who want to avoid cash handling, now threatened by decentralized payment network Block Chain, and its virtual currency BitCoin.
• Notary Service - Middle man who is authorized to perform numerous legal formalities and record keeping, now threatened by distributed Blockchain ledger and services like Proof of Existence.

So if you want ideas for starting up a new company, think about how you can eliminate the middle man, or any middle man.


image credit Ahmad Nawawi

Idea 48: Keyword Group Chat - Real Time Twitter / Quora

Ever had a question about something, could not find it online, then post it in a forum, or Twitter/Quora, and painfully waiting for someone to reply? What if you can have instant communication with a person holding the right piece of information, whenever you wanted it?

The idea is to provide an infinite amount of real-time chat rooms organized by key words.

Type something on your mind, "laptop", "heroku", "health insurance", "games", "Chinese food", the related sentences or key words that other people are typing in real-time will start to show up. Along with the sentences are chat-rooms associated with the sentences. You may choose to join one of them, or create your own, while letting all the people who are interested in similar topics know.

It is not the chat room in traditional sense, where you look into a category and see what are the rooms in there. Here, you type something and find related things that are happening in ALL chat-rooms in real time. On the technology side, this may require some complex real-time reindexing, however, demand is the mother of invention, right?

As the user base grows, businesses can establish real-time customer service reps answering questions, and because the common information is shared among all interested participants, the rep redundancy can be kept at a minimum.

Please let me know if you are interested in implementing such an app.

North-America Chinese Professional Business Plan Competition

The UCAHP Chinese professional business plan competition was held on Jan. 9th. 20 startup teams, selected among more than 100 submissions, presented their ideas and business plan, in front of judge panel consisting of top-tier VC's and angel investors, such as Northern Light, GSR Ventures, West Summit Capital, NEA, Sierra Ventures, etc. 

Among the contenders, I was particularly impressed by the following teams. (the winning team can be found here at UCAHP).

• Zebra - multi-media storage and bandwidth optimization
• PalMap - indoor map for shopping complex and convention centers
• BCBM - converting low-value coal into natural gas
• Clean Solar - Titanium dioxide solar power panel
• HealO - wound care chamber treatment

What I observed and learned was that two types of ventures have higher probability of succeeding, or surviving:

1. Deep technology accumulation in solving a bottle-neck problem in an established market;
2. Creative user experience, or business model, that acquires user base rapidly in a fast growing new market;

In both cases, business operation is as important as technology, in terms of sales channel establishment, average cost of per customer acquisition, and brand building. It all depends on the founding team, and a bit of luck.

China Fast Development Represents Huge Opportunity

After two months in China, the country where I grew up until 12 years ago, I feel anti-culture shock. It has changed so much, the bullet trains, the highways, the constructions of new cities everywhere, high rises, etc., and the way people live and talk, you don't feel it unless you really stay there for extended periods of time. For this time, 10 cities across the country was good enough for me.

1. Tons of people

People everywhere, on the streets, in the department stores, restaurants, hospitals, subways, buses. Anywhere you go, you bump into people. The day we went to the World Expo in Shanghai, there were 700 thousands people visiting on that day. The day before our visit, which happened to be a Sunday, over 1 million people.

The waiting for the Saudi Arabia theme park was more than 8 hours, for Germany, 4 hours. Not sure about the motivation behind all these people waiting in lines, but this is China, if anything gets popular, people will wait in lines to get it. Imagine if each person in line pays you $1 for your product or service, how much would it do to your business.

2. Standard of living matching western world

Most city dwellers have private cars, sometimes more than one per family. Ever since the traffic control by license plate number was enforced in Beijing, i.e. you cannot drive your car one day each week, families started to purchase the second car, and the total car ownership increased at a faster speed. The city of Changsha, capital city of Hunan province, with a population of 3 million, has above 1 millions motor vehicles registered.

Modern kitchens, hot waters, electronic appliances, and fancy toilets, used to be luxurious items, now appears in regular families. Take a visit to the shopping mall in Shanghai Pudong 正大广场, 10 times larger than the Valley Fair in the Silicon Valley, where you will find all of the top U.S. brands in apparels and even Best Buy, only that the prices are higher when converted into dollars. Talking about purchasing power.

Idea 43: AdSense For City Resident Street-Front Windows

June 18th, 2003, the way people do business on the web changed for ever. That's when Google launched AdSense. It's such a powerful business model that captures the long tail of online publishing.

The real estate in big cities such as New York are expensive, for a reason, location! A lot of people go there. For the same reason, why can't we cash in from the location by renting out street-front windows for ads just because they catch a lot of eye balls?

Using a similar business model as AdSense, one can connect empty ad spaces from millions of apartment dwellers, to ad suppliers and agencies. With creative, artistic designers, this may as well put some additional coloring in the dynamic city landscape.

To put this idea further, in fact, yellow cabs have lots of ads, outside and inside. Smart marketers have noticed that ton of turn-overs in and out the cab, which means gazillion eyeballs. Hey, why not stick some ad on my car also? I don't mind, knowing that it generates additional income. :)

Ad is a form of information transfer. If it delivers that right piece of information to the one in need, it's beneficial to both and our society. Shall we have more ads, please?

photo credit bass_nroll

Idea 34: You Have A Friend In The Bed And Breakfast Business

Travel has always been a good business. Not to mention the host of online reservation sites, the more recent innovative services that brings social network into travel planning was pretty cool, such as mobissimo.

When travelling abroad, I like to stay at bed and breakfasts. My experiences with them have been nothing but wonderful. However finding a good B&B takes tremendous time. Why can't we have a full service B&B travel agency that plans the whole trip with the cost and quality that you know you can trust?

The idea is to develop an exclusive location-based travel planning that includes B&B lodging, local transportation and air ticketing. Let me call it B&B and Beyond.

B&B and Beyond will start with China, since we know where to visit and stay, how to get around, and the best deal to travel there. Want to visit China, for business or pleasure? Come to B&B&B China. Since you are our friend, we will treat you as so, let you stay at our house, drive our cars, and eat at our favorite local restaurants.

In fact, in order to become friends, we need to make sure we like each other. That's why we encourage you to send us an introduction, a photo of yourself, let us check out your personal website or Twitter stream. If we really like you, we may even do a face-to-face chat with you to find out more about you. That's right, because the service is so good, it is exclusive to our extended friends only.

B&B and Beyond will expand the friendship network through word of mouth and extremely welcoming family-style service, and eventually cover every major travel destination of the world.

photo credit Torley

Idea 33: Affiliate Club - Buy Everything Online 5% Cheaper

If you follow through a product link provided by an Amazon Associate, and purchase the referred product on Amazon, the associate, or affiliate, earns 4% of the purchase price, in some cases up to 15%. You may wander, if Amazon can still survive after the cut, why can't you directly get the discount yourself?

Can't you refer yourself? Well, Amazon specifically prohibits that in their operating agreement, even family members are excluded. Here's an idea.

Join the affiliate club, where your fellow affiliates are your friends, who can refer you to buy literally any product on the web that offers an affiliate program, Amazon, Zappos, country clubs, or Twitter follower builder software, you name it.

Thinking of buying something? Go to the club website, give the product name, then follow a link, which is an automatically generated referral link that will direct you to the most credited ecommence site for that product. If you make the purchase, then you will be credited 5% of the purchase price in your club account.

Of course the discount was not directly offered to you by the ecommence site, but because you made an effort to contribute to the club, you deserve and earn the credit. Once your account accumulates above certain threshold, you receive a rebate check, just like the one given by your credit card company for using their card.

How does the club make money? Ask Google. They exploits the long tail of publishing ads to the extreme.

In conclusion, if the economy can provide us with cheaper goods, why shouldn't we take advantage and make all our lives better, together?

Disclaimer: the ideas expressed are out of pure personal intellectual curiosity. There has been no market research conducted whatsoever to justify their legitimacy or viability. Ok, you've been warned.

photo credit voj

Idea #23 How to Generate The Best Ideas For Art And Business - From Crowd

Threadless is a web service that sells artistic T-shirts. All shirts are designed by the member artists, voted by members, and eventually sold to the members. Taking this further, Twitter Tees allows the same community members to design T-shirts from their Twitter updates.

This is a excellent concept for generating the best ideas for art, and in fact, business.

• Don't know what product will sell ? Ask the community.
• Don't know how to design the product ? Ask the community.

As long as there is a virtual platform to gather a large group of people with common interests, enable them to contribute, vote, and exchange ideas and designs effectively, this is going to be a bulletproof business plan.

It is slightly different from crowd sourcing, which was made popular by Jeff Howe in an article in the Wired magazine. Crowd sourcing, like out-sourcing, is to completely hand the problem to a group of people, who would design their solutions separately and one winner takes the final award. What's more important is the collaboration between members that gradually build up an ideas or concept.

In summary, I think the Threadless concept can be generalized to many areas of design that requires creative thinking and collaboration among a group, reminded me of open source silicon. I further think this is a unique business model that will appear more often in the near future. How about a threadless furniture design store, community designed Ikea ?

photo credit Franco

Idea #3 - Google Base for buyers

Google Base is all about sellers, corporate sellers, individual sellers, sellers for new products, sellers for used products. What about a market places for buyers? Imagine a channel where all buyers post the type (and price range) of products they would like to purchase; imagine all related marketing research is delivered to the buyer seamlessly. This may include the lowest price available (taking into account of tax and shipping cost, possibly savings in product bundling), ratings for seller credit history, ratings for customer service, and projected price change in the near future, etc. All targeted product information is automatically fed to the buyer, RSS enabled as well, smartly, quietly, and unintrusively!