on value destruction

It seems both ironic and surprisingly brief; the mention of value destruction at a Goldman Sachs technology conference. hmmm. 

…Fireside Chat with Bill Gurley, Benchmark Capital & Max Levchin, Google (PayPal, Slide)

On Value Destruction:

· Bill – Today upstarts can just wipe out value—pure value destruction. Example: look at SlideShare v. PowerPoint. (A day or two after this, Benchmark announced its investment in Uber, another value-destructing startup for (or against?) the taxi industry).

· [CG] – Never before has the guidance that it is preferable to cannibalize your own revenue been more applicable. This can be an extremely hard pill to swallow, especially if your experience includes a previous product combining enormous margins and extremely high growth. Trading dollars for dimes is psychologically devastating. Many companies facing this prospect will do anything to avert it—with the result often being their own demise by a competitor, rather than by reinventing themselves.

On “Likes” as a Recommendation Strategy:

· Bill/Max – everyone is hot for friend “like” recommendation engines as part of their strategy, but in many, many cases, the value just isn’t there. For example, Netflix once implemented a “like” recommendation engine as a feature to help users find new movies, but the company found that it failed to outperform other models of recommendation.

via Value Destruction and the Return of the Door-to-Door Salesman: Notes from the 2011 Goldman Sachs Technology and Internet Conference – Christopher Griffin on Startup Thinking.

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s