Tuesday, January 10, 2017

Tools for Titans #34 : Build something which have no value in others copying them

Chris Young is an inventor and tinkerer who is co-author of this mind-melting book called Modernist Cuisine.

The one single idea in this section which is worth thinking about is a question of what we would build if we have $100 million that would have no value to others in copying. This question encapsulates several more important questions we need to ask ourselves before we get into the start-up space. It has implications when we invest in technology as well.

One interpretation is what kind of barriers to entry will we erect against competitors. The example shared is about Intel chips. It is so expensive to produce Intel processors that competitors would rather not invest the billions of dollars to copy Intel's designs.

Another related idea is the question of how much your own revenue can cost an incumbent. If every $1 you make costs an incumbent $10 in lost sales, the incumbent is better off investing in your company than resisting you in this new space.

Right now Singapore is slowly waking up to the idea of legal tech. We are seeing a lot more press coverage on legal start-ups and the government is starting to get law firms to buck up and become more productive.

As we get more coverage on legal tech. We will see a lot more push back from the legal industry about how much bespoke work lawyers bring to the table and why lawyering will be never be affected by the latest and greatest developments in artificial intelligence. I have tried playing with smart contracts and even the spreadsheet from the Legalese website and I think we are quite a few years away from any meaningful revolution right now in the legal sector.

The question of whether lawyers will be replaced by software is not the right nor politically correct question to ask right now. You will be up against the most powerful Guild in Singapore.

The question to ask is whether a combination of new technologies with capable legal professionals can generate revenue via productivity improvements at the expense of the incumbents in the legal industry.

As it stands, these startups can hardly generate any revenue so the $1 revenue of such a firm will not be able to create any loss to the incumbent even within the short and medium term.

But the game has only just begun.

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