Connecting: The Key To Your Next Billion Dollar Business

What Do These Billion Dollar Businesses Have In Common?

What do all of these companies have in common?

Here are some things that have been said, while¬†correct, they are not the essence of what makes these companies so valuable and so disruptive. For one, whichever service they offer, whether its transportation, housing, groceries, crafts, goods or space, no matter what it is that is being offered, none of it is ever “owned” by the company. Taxi drivers and car rental fleets own their cars, Hotels own their properties, grocery stores own their groceries, (albeit briefly), craft stores own their inventory, and leasers of office space own their space. So you might be forgiven if you said “they don’t own their inventory”

No, the key behind these billion dollar businesses is connection. They connect the owners of the objects (no matter who or where they are) with the users of the objects. Sometimes they are purchasers (such as in the case of Etsy and eBay) and in other cases, they are renters.

If you really think about it, its all about connection. It’s about connecting supply and demand, its about creating a marketplace where these connections can occur. These really aren’t businesses in the classical sense – they are more like frameworks or platforms to allow individual solopreneurs, or micro-businesses to easily connect with customers. While the concept of a platform business is a new thing, what they are facilitating is not.

People have been making connections and owners have been renting things ever since the dawn of ownership. What is really making a difference here are a number of technological, economic, cultural and governmental shifts which have occurred simultaneously, which have come together to make this possible:

  • Technological: extremely cheap, portable and accessable smartphones with GPS, mapping and very easy to use interfaces and payment mechanisms
  • Economic: massive unemployment from the 2008 recession, driving people out of the prior workforce and into the gig economy, forcing them to leverage their ownership in things in order to make a living
  • Cultural: The conversion of society from one that celebrates individualism to one that celebrates collectivism, stemming from a new class structure emerging between a wealthy¬†elite and everyone else.
  • Governmental: More regulations mean that its much more difficult for people to start small, brick and mortar businesses, so when they need money fast, they turn to a gig economy platform.

The technology required to develop billion dollar businesses like the above would never have been developed without infrastructure like cheap, ubiquitous internet, embedded payment mechanisms, mapping and GPS systems, or cloud based server farms like Amazon Web Services, which run behind most every startup. If it weren’t for the breaking of the social contract between corporates and employees during the 2008 recession, there would not have been a wave of individuals with extra supply of cars, rooms and time available to undertake tasks like driving others around, renting their rooms or picking up and delivering dinners. Our do-it-myself mentality, embedded in Americans since the our beginnings, is being subsumed by the collective. No longer do we celebrate the individual achiever, its all about what the group, the team or the collective can do. And if I can get a collective of the “gig classes” to do my grunt work for me, all the better, because hey, “I can afford it.”

The ideal billion dollar business connects those with the demand to those with the supply, without requiring the ownership of the supply in-between. They are pure connectors, using algorithms and humans to connect people together as efficiently as possible. They provide a win-win situation – the customers get their services, and the providers get paid, no collections required, no need to set up their own businesses, no need to get into the muddle of regulations and licenses. Neat and easy.

That is the new key to a billion dollar business: build a marketplace platform which connects the supply of anything to the demand of anything. Couple that with your passion, and find a poorly serviced market, and nothing can stop you.