I've been an entrepreneur and active on the Internet for well over a decade. Yet I must humbly admit how stunning I am finding the transformation that the Internet is wreaking by flattening the world. I readily concede that large incumbents have tremendous competitive advantage in the consumer products space. But I'm fascinated and encouraged by how the creative entrepreneur can leverage dramatic cost differentials and perhaps redefine the playing field. Just as traditional armed forces struggle to respond to threats created by creative, harrassing, small and nimble attackers, I wonder if we're at the cutting edge of a new wave of entrepreneurial ventures in the consumer products space.
Let me put a little meat on the bones here. As posted previously, we recently launched a new type of dog bowl that slows down how fast dogs eat. This has all sorts of benefits to the dog (better digestion, lower risk of bloat) and to the owner (reduction or elimination of vomiting, choking, etc.). Here are a few "dramatic" cost equalizers that we've been able to achieve:
1) website -- logo, design, commerce enable, integrate w/ FedEx, inventory management, email confirmation, shipment tracking, conversion tracking, etc.: less than $1,000 (combination of some incredible design resources we've tapped into in India, and Volusion).
2) video footage (infomercial type) showing the bowl in action with split screen video: less than $200 (this time we tapped into an amazing group in Serbia). Check out the video at www.dogpausebowl.com
3) initial product design, prototyping, and first round of soft tooling: less than $20,000 (knowing what we know now, we could cut likely cut that in half).
I'm not yet even close to declaring victory, so don't misunderstand. But the barrier to entry today is dramatically less than it used to be. Just 5-10 years ago we (a) wouldn't have been able to find such resources, (b) wouldn't have been able to coordinate and execute a largely virtual launch of a physical consumer product, and (c) wouldn't have been able to iterate and improve quickly.
We'll see where this goes, but the opportunity to get product into the market at very low experiment costs is really pretty exciting. And, just as with other industries, once a proprietary product has sales traction, M&A becomes a straightforward path for exit.
If the objective of a portfolio is to get multiple shots on goal, and if a flattening world permits more shots per dollar, the ability to assemble cost-effective attacker strategies is getting a heck of a shot in the arm...