Small is the new big
: I’ve been trying to figure this out for sometime: On the one hand, things in our world are getting bigger: Walmart… media conglomerates… Dell… merged airlines… megachurches… Home Depot… merged banks… Microsoft…
But on the other hand, things are getting smaller: The empowered individual can create a media company, using blog software; create a manufacturing company, using somebody else’s factory and somebody else’s distribution; create a multinational enterprise, using nothing more than a Skype line.
I wondered whether small was just a trend or a new organizing principle for the business world. I now think it could be the latter. Small won’t replace big, of course, but small will add up to considerable new competition. And that is because small can now succeed. The economies of scale must compete with the economies of small.
On the supply side, the point of critical mass has imploded. It used to be, you couldn’t make money writing unless you got paid by a big publisher; now you can begin to make enough money blogging. It used to be, you couldn’t make money running a store unless you had location and marketing and capital and employees and enough revenue to support all that; now you can make enough money on eBay. It used to be, to get a job you had to be willing to dress up and commute; now you can work at home online. The cost of running business has declined; the revenue you need to be successful thus declines.
But there’s the critical calculation: The price of independence declines. In a world where most people are sick of their jobs — be honest now — this is big. There is no loyalty from employer to employee and given the chance to earn FU money, there will be no loyalty from employee to employer. We’ll see more and more people trying to make it on their own and now more and more can.
On the demand side, I do believe that the market will embrace alternatives to the one-size-fits-all malling of the world. Before the Berlin Wall fell, I was amazed to find a Benetton in East Berlin. Now you can find the same stores from the same malls everywhere — all over Berlin and even filling once-hip Soho in New York. Everything’s the same, nothing’s unique, and that takes the fun out of shopping. So given a chance to buy something special, wouldn’t you? You’ll find it on eBay or even an Amazon zShop or on one of the craftsman’s group sites online and you won’t need to buy much to make that seller successful.
You’ll also save money. We’ll see the death of many middleman. That is what Craig’s List is all about. Who the hell wants to pay real estate brokers if you don’t have to? Direct, person-to-person commerce with the aid of services like eBay and FedEx reduce friction and cost and put middlemen out of business. And that is what internet media is about: direct, person-to-person communication.
And you will come to a new definition of value built on trust. Dealing with big companies today — airlines, banks, stores — you know you’re going to get screwed and consumer victory is avoiding that. In the person-to-person marketplace the internet enables, you do business with and converse with those you trust. They value that trust and earn it.
Walmart won’t die. But it will have a million new competitors. Newspapers won’t die (maybe) but they better figure out how to embrace the small guys who can cover the news they can’t afford to cover. GM won’t die (maybe) but look at one of the links below to see a guy who put together his own company making scooters with his own design and others’ manufacturing; can cars be far behind? Microsoft and Intel and Apple won’t die, but see another link below about a guy who’s using someone else’s manufacturing to make his Pez-like MP3 players. Airlines will die because they don’t know how to get small and any old Joe can’t get a berth at JFK and that’s why airline travel today sucks.
: I’d been contemplating this and the other day, I mentioned in a link to Seth Godin’s blog that I was working on a post about how “small is the new big.” Then, the next day, Godin headlined a post with just that notion.
Small is the new big because small gives you the flexibility to change the business model when your competition changes theirs.
Small means you can tell the truth on your blog.
Small means that you can answer email from your customers.
Small means that you will outsource the boring, low-impact stuff like manufacturing and shipping and billing and packing to others, while you keep the power because you invent the remarkable and tell stories to people who want to hear them.
A small law firm or accounting firm or ad agency is succeeding because theyíre good, not because theyíre big. So smart small companies are happy to hire them….
Is it better to be the head of Craigslist or the head of UPS?
Small is the new big only when the person running the small thinks big.
: See also Fortune on the “amazing rise of the do-it-yourself economy.”
: See also Business 2.0 on the “new instant company.”
: See also this Powerpoint on the death of blockbuster media — an industry built on the hope of getting massive mass — and the rise of micromedia.
: And the funny thing is, small keeps getting smaller. Here is The New York Times chastising eBay for being too big and telling them they should learn some lessons from li’l ol’ Criag.
: SEE MORE: Trendwatching.com’s latest newsletter touches on how marketing happens in a small-is-the-new-big world: Of course, it’s about recommendations — links — from friends and trusted cohorts, first. And TW says this leads to “twinsumers” (yes, they get paid more for making up obnoxious names for things… and “bloggers,” “vloggers,” and “podcasters” can hardly throw darts), which means that people are in search for their “taste twin.” That is the ideal and the infrastructure of the internet is now enabling it.