We could not miss the news of acquisition of WhatsApp by Facebook, so we covered it in the recent post on HBR Blogging Network. With $19 billion, Facebook could have purchased Sony or Gap or four aircraft carriers. Instead, it bought WhatsApp, a tiny startup that so far had accumulated barely $60 million in funding, mostly from Sequoia. This is nuts, you might say; although the world of mobile messaging is upon us, that is an awful lot of money.
But think about what exactly Facebook is buying:
To finish the year with a blog post, we recently discussed Groupon’s business model on HBR blogging network. Not long ago, there was this multi-billion dollar company called Groupon that was going to revolutionize the business of bargains, whose founders turned down a $6 Billion offer from Google. Yet the revolution never came.
Amazon.com is in the headlines again because it started Sunday package deliveries in several large cities. This offering follows the company’s recent strategic decision to offer same day delivery to most US addresses. As a part of this strategy, the company is drastically increasing the number of warehouses all around the US.
As we discussed in our forthcoming book, and this recent post on the HBR bloggers network. Amazon is in a class of its own when it comes to thinking about its business model. We are all accustomed to new offerings from Amazon.com: in fact, since its inception in 1995, Amazon has fundamentally changed its business model several times. At its inception, Amazon’s operation was organized around a “sell all, carry few” business model: while offering more than a million books it actually stocked only about 2,000. The remaining titles were sourced through several arrangements but predominantly by “drop-shipping”: Amazon simply forwarded customer orders to book wholesalers or publishers, who then shipped the products directly to consumers using Amazon’s packaging materials and labels.
After a brief summer hiatus, we are back and blogging! As we describe in the recent blog post on HBR Network, innovation success stories are all strikingly similar: a bright idea, supported by a zealot-innovator who sees it through. The windfall of goodies follows. But failures happen for all sorts of reasons, and they often occur even when the idea is sound.
Two weeks back, Tesla Motors, the company behind the Tesla Model S, arguably the most promising all-electric challenger to the century-long domination of fossil-fuel cars, announced an innovative switching station based infrastructure that would bring its flagship product one step closer to being the first all-electric no-compromises luxury sedan.
We were delighted to hear of this latest move by Tesla. Almost four months back, on this blog, we called for Tesla to complement the path-breaking technology in the Model S sedan with an innovative business model to match (Tesla’s Model S: Technology Outruns the Business Model). The proposed battery-swap system will allow a driver to replace a depleted battery with a fully charged battery in less than 90 seconds — faster than filling up a tank of gas — giving electric vehicles the almost unlimited range of fossil fuel vehicles.
As we discuss in our recent blog post on HBR Blog Network, the death of over 800 people in the collapse of Rana Plaza, a building with garment factories in Bangladesh, spurred widespread outrage over working conditions in offshore factories. In the search for blame, many commentators point to the absence of building codes, lack of workplace safety rules, and the greed of US corporations. Many of the solutions proposed are around paying people more to manufacture in the USA. But however well intentioned the ideas are, this is not the best use of one of the most productive workforces in the world. The true solution, we think, lies in understanding the changed nature of modern supply chains and identifying new business models better suited for managing them.