Donald DeSantis explains how an unnamed "crime boss" mentored him through his first high-tech startup. The piece is a little oblique, thanks to a lack of specifics ("The other business was transactional and lacked any customer loyalty or love." — OK, what was it?), but it's still an entertaining read:
Cut out the middleman
As Kobayashi's businesses grew, he was in a position to start bypassing middlemen. Instead of dealing with distributors, he went straight to producers. Instead of hiring contractors, he purchased required equipment and moved people onto payroll. Everywhere he saw a third party making money, he figured out a way to replace that person or bring them in-house. He reduced costs at every step. He constantly encouraged me to do the same.Interesting things happen when we cut out the middleman. In addition to reducing cost, we often end up creating an internal byproduct that can be productized and sold to a completely new customer. (Amazon Web Services is an example of this.) Sometimes the middleman's market is so huge, that a freaking enormous business can be built simply by providing their customers a lower cost and more efficient option. Two-sided marketplace businesses are a textbook example of this type of disruption.
Everything I need to know about startups, I learned from a crime boss
(via Kottke)
(Image: Chopping off my little finger, a Creative Commons Attribution (2.0) image from nihonbunka's photostream)
