Blabberings on technology, the web, mobile world, India, books, events, communities and everything else (Chautauqua: An old-time series of popular talks intended to edify and entertain, improve the mind and bring culture and enlightenment to the ears and thoughts of the participants)

Location: United States

Tuesday, January 10, 2006

successful products and economic/social wealth

For a long time now, I've believed that a successful product/service creates new wealth in an economy/society. And by new I mean, that wealth did not exist earlier. Now, I'm no economist, to be able to defend this hypothesis in economic terms, but I can throw out some examples and explain what I'm trying to say.

If one looks at any web-based success story today, you'll see how eventually the service/product created new wealth. For example, E-bay, it might be known as the world's largest auction site and might be only about buying and selling, it has provided economic value to junk that used to rot away in people's basements and garages. Thus, it has gone about created new wealth in the economy by suddenly being able to pair supply with demand across physical boundaries. And E-bay isn't the only one - take Google as the next example. They might be the world's best search engine and it may be their page-rank system that got them going. However, what made them succesful is the fact that people suddenly had easy access to relevant information. Not only did it save people time and energy, but it provided advertisers with a targeted market, thus increasing the probability of finding a customer with limited spending on advertising. And if that isn't creating wealth that did not already exist, what is it? One could make a similar argument about myspace, or yahoo or microsoft.

The moral of my story then is that the ideas that revolutionize the market, or products/services that really make it big, are those that have the potential to create something in the economy. They add something to the social and economic fabric of a society and change the very way people function. That to me, is the touchstone of a succesful product/service. So, now each time I look at a startup, the first question in my mind is 'Is this going to create some new wealth in the economy'? And it doesn't matter whether it is tangible or not.

Of course, making money out of a venture is, I believe, a by-product of the larger outcome of creation of new wealth. So, even though social-networking sites (except linked-in) might not have figured out how to monetize their service, they have managed to create economic/social wealth by bringing people together.


Anonymous Paul said...

Well done Harsh. Really good stuff. catch you monday.


5:11 AM  

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