On New Technologies

Any time I encounter a new technology, I ask myself two things:

  1. How does this make existing well understood businesses more efficient, faster, more profitable, or save them more money?
  2. What businesses were infeasible before that are now feasible?

The list of businesses I use for 1. is the following:

  • Pizzeria (with delivery and sit down service)
  • Doctor’s office
  • Automatic Appointment reminder SaaS
  • Warehouse Inventory Tracking
  • Transportation logistics
  • Building a robot
  • Financial Trading
  • Manufacturing a vehicle
  • Smart Thermostat
  • Home Security Alarm System

These businesses are purposefully varied and vague since I use them just to get my brain to start thinking of different applications.

Question 2. is in my opinion more interesting since it doesn’t apply to every new technology. However, when it does apply, the upside could be incredible. Often the innovations that make an impact here tend to be those that lower the barrier to entry in some way.

For example, what if a new technology lowers the barrier to entry for sending and receiving payments?1 Instead of spending tens, or hundreds, of thousands every year on bank partnerships and developers, all of that time and money goes to your core business. In that case the cost of validating an idea where payments are involved could be in the low thousands instead of an order of magnitude higher. What used to take months and truckloads of money is now an API call – that’s innovation.2

So, what can you do with it?

  1. For those who haven’t looked into this before, you might be surprised to learn that prior to the modern day payment behemoths like Stripe that offer a simple API for moving money around, you would spend a lot of money partnering with a bank to be able to move money around. And even then, that might just be moving money via ACH so all payments would take roughly a few days to materialize. You could easily spend hundreds of thousands per year depending on what sorts of payments you want to handle and this is money and time taken away from your core business… ↩︎

  2. An interesting counter point is that in the past when people were willing to go through so much friction to pay you for your service then you really knew you were on to something. AirBnB is a good example of a well known business that has payments at it’s core but it didn’t launch with support for payments… ↩︎