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Class Exercise: Creative Destruction

Business, Law, and Innovation. Class Exercise: Creative Destruction. Lecture 2 Spring 2014 Professor Adam Dell The University of Texas School of Law. Recall What Creative Destruction Is. 2. There are numerous types of innovation-generating creative destruction in an industry:

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Class Exercise: Creative Destruction

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  1. Business, Law, and Innovation Class Exercise:Creative Destruction Lecture 2 Spring 2014 Professor Adam Dell The University of Texas School of Law

  2. Recall What Creative Destruction Is.. 2

  3. There are numerous types of innovation-generating creative destruction in an industry: New markets or products New equipment New sources of labor and raw materials New methods of organization or management New methods of inventory management New methods of transportation New methods of communication New methods of advertising and marketing New financial instruments Types of Creative Destruction 3

  4. Let’s look at some industries That are getting destroyed / re-invented Personal transportation Delivery Services Point of Sale Food Systems 4

  5. Personal TransportationUber How many of you are customers? Prefer the experience to typical car service? Would recommend it to a friend? Found it price competitive?

  6. Uber – Value PropositionValue Proposition:To the consumer?To the driver?To the dispatch companies?

  7. Uber - EconomicsBlack car is a $11b market in the US. Uber is already in India.Uber takes 20% of the total.Pays drivers immediately.Less expensive than a traditional car service.Spends $0.00 on marketing. Doesn’t have one of these:

  8. Uber - EconomicsInstead it has this:

  9. Instead of this: Uber - Economics They have this:

  10. Uber – CompetitionLyftSideCarHailoRelayRides?

  11. Uber: RegulationWillie Brown, former mayor of SF, got a condo at the St. Regis from the taxi commission…And Uber:Regulations Prompt New Fight Between D.C. Taxicab Commission ...wamu.org/.../new_regulations_prompt_new_fight_between_dc_taxicab_...‎Aug 21, 2013 - But the D.C. Taxicab Commission has passed regulations ... Linton insists the commission is not picking another fight with Uber, which fought ...D.C. Has Already Outlawed Uber's New Taxi Service - WNYCwww.wnyc.org/story/313837-dc-outlaws-ubers-new-taxi-service/‎Aug 21, 2013 - Linton insists the commission is not picking another fight with Uber, which ... "The D.C. Taxicab Commission does not fight with the people it ...Stakes in Uber vs. taxi fight are higher than most people realize ...www.dallasnews.com › Opinion › Sunday Points‎Aug 30, 2013 - In Washington, D.C., the Taxicab Commission is trying to stop Uber from offering cheap rides in small cars. In New York City, it took a massive ...Taxi Commission Passes New Regulations To Block UberX, Uber ...dcist.com/2013/08/dctc_passes_new_regulations_to_bloc.php‎Aug 20, 2013 - Yesterday, the D.C. Taxicab Commission passed new regulations that will ... it work: "Consumers want Uber in D.C. We're going to fight for that.FTC sides with Uber in DC taxi fight | TheHillthehill.com/blogs/hillicon.../305161-ftc-sides-with-uber-in-dc-taxi-fight‎

  12. Uber – Expanded and Expanding to Taxis, Rental Cars, Delivery, Helicopters, Planes.What’s next? If you were the head of product?

  13. Point of SaleSquare / Shop Keep / Bread Crumb How many of you are customers? Prefer the experience to typical point of sale system? Would recommend it to a friend? Found it price competitive?

  14. Square – Value PropositionValue Proposition:To the consumer?To the merchant?To the credit card companies?

  15. Square – POS MarketGlobal POS hardware market to reach $31 billion globally, 2014.

  16. Square – Unit Economics Global POS hardware market to reach $31 billion globally, 2014. VS

  17. Point of Sale – Economics / Competitors VS +

  18. Delivery ServicesTask RabbitHow many of you are customers?Prefer the experience to typical messenger service?Would recommend it to a friend?Found it price competitive?

  19. Task Rabbit – Value PropositionValue Proposition:To the consumer?To the rabbit?To the messenger companies?

  20. Task Rabbit- EconomicsDelivery Industry is a $15b market in the US. Task Rabbit takes 15% - 20% of the total. Pays rabbits immediately.Less expensive than a traditional messenger service.Spends $0.00 on traditional marketing. Doesn’t have one of these:

  21. Task Rabbit - EconomicsInstead it has this:

  22. Task Rabbit- RegulationDoesn’t seem to be a problem…yet.What could go wrong?

  23. Task Rabbit– Expanded and Expanding to Delivery, Cleaning, Odd Jobs, Handy Man, Virtual Tasks, What’s next? If you were the head of product?

  24. Task Rabbit– CompetitionFavor (here in Austin)HomeJoy (just raised $38mm)Zeel (massage)GetMaid (cleaning)Cherry (car wash)

  25. Food SystemsGood EggsHow many of you are customers?Prefer the experience to typical grocery store?Would recommend it to a friend?Found it price competitive?

  26. Good Eggs– Value PropositionValue Proposition:To the consumer?To the farmer?

  27. Good Eggs- EconomicsGrocery industry is a $650b market in the US. Traditional operaters live on tiny margins, 3-4% points.A few outliers: Whole Foods.

  28. Good Eggs –Expanding to: Brooklyn, SF, LA, NOLA

  29. Task Rabbit– CompetitionAmazon FreshFresh DirectWhole Foods Delivery

  30. Class Exercise: What’s NextCan you envision creative destruction in an existing market?How would you do it?You can deliver cheaper?Without advertising?Without people?

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