Monday, June 11, 2007

Let's dance

The memory of my first seventh-grade dance is, well, something I wish I did not remember. It was adolescence at its most painful. A steamy, barely lit gym full of several hundred similarly steamy teenagers, girls on one side, boys on the other, Stairway to Heaven spun by the DJ. Line dancing, if courage prevailed, and then the who-am-I-going-to-dance-with, it’s-dark-and-I-can’t-see last dance dissonance. Most of the time, the lights stayed low with genders wallpapered to their side of the gym.

Some new business opportunities, and the resulting business models, are similar to junior high dances. Opportunities germinate when disparate, disconnected audiences are connected. The gym is full with anxious and able participants, but the lights are out. Then, along comes a company with an enabling business model, one that brings the two audiences together. With the flip of a switch, connections are made and value is exchanged.

eBay did it with fragmented sellers of seemingly undesirable goods. They created a marketplace for anonymous, theretofore in-the-dark buyers and sellers to convene and conduct commerce. eHarmony and flipped the switch too, literally bringing genders together. Amazon connects independent book publishers with a previously unreachable audience of book buyers. iTunes too: Garage and indie bands can now sell to the masses. The lights are on.

If there’s a common, opportunistic thread, it’s an inefficient market where information, commerce, and connections are constrained, and where scarcity – in shelf-space and distribution (books and music), and connections (the ability to buy and sell, to meet and communicate) – is the rule. Thousands of micro, niche markets (junior high school gyms) do business in the dark, awaiting illumination.

Flip the switch and you’ll enable a market to operate efficiently.

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