Bitcoin will succeed despite opposition just like tesla did
Enter your email address to subscribe to this blog and receive notifications of new posts by email. The greatest number of jobs is created when startups create a new market — one where the product or service never existed bitcoin will succeed despite opposition just like tesla did or is radically more convenient. Yet this is where startups will run into anti-innovation opponents they may not expect. Smart startups prepare to face off against rent seekers and map out creative strategies for doing so….
First, however, they need to understand what a rent seeker is and how they operate…. Recently, the New York and North Carolina legislatures considered a new law written by Auto Dealer lobbyists that would make it illegal for Tesla to sell cars directly to consumers. This got me thinking about the legal obstacles that face innovators with new business models.
Examples of startups challenging the status quo include: Past examples of startups that succeeded in redefining current industries include Craigslist, NetflixAmazon, Ebay and Paypal. While TeslaLyftUberAirbnbet al are in very different industries, bitcoin will succeed despite opposition just like tesla did have two things in common: Rent Seekers Rent seekers are individuals or organizations that have succeeded with existing business models and look to the government and regulators as their first line of defense against innovative competition.
They use government regulation and lawsuits to keep out new entrants with more innovative business models. They use every argument from public safety to lack bitcoin will succeed despite opposition just like tesla did quality or loss of jobs to lobby against the new entrants. Rent seekers spend money to increase their share of an existing market instead of creating new products or markets.
These barriers to new innovative entrants are called economic rent. Examples of economic rent include state automobile franchise laws, taxi medallion laws, limits on charter schools, auto, steel or sugar tariffs, patent trolls, bribery of government officials, corruption and regulatory capture. Not all government regulation is rent or rent seeking. Not all economic rents are bad. But patent trolls emerged as rent seekers by using patents as legalized extortion of companies.
How do Rent Seekers win? Instead of offering better products or better service at lower prices, rent seekers hire lawyers and lobbyists to influence politicians and regulators to pass laws, write regulations and collect taxes that block competition.
The process of getting bitcoin will succeed despite opposition just like tesla did government to give out these favors is rent-seeking.
Rent seeking lobbyists go directly to legislative bodies Congress, State Legislatures, City Councils to persuade government officials to enact laws and regulations in exchange for campaign contributionsappeasing influential voting blocks or future jobs in the regulated industry. They also use the courts to tie up and exhaust a startups limited financial resources. Rent Seekers take advantage of regulatory capture to protect their interests against the new innovators. As the company grew larger, incumbent banks forced PayPal to register in each state.
In unable to compete with the quality and price of Japanese cars, the domestic car companies convinced the U.
Japan overcame these barriers by using their import quotas to ship high-end, high-margin luxury cars, establishing manufacturing plants in the U. Innovation in the Auto Industry According to the Gallup Poll American consumers view car salesman as dead last in honesty and ethics. In these states it appears innovation be damned if it gets in the way of a rent seeker with a good lobbyist.
Rent seeking is bad for the economy Rent seeking strangles innovation in its crib. When companies are protected from competition, they have little incentive to cut costs or to pay attention to changing customer needs. The resources invested in rent seeking are a form of economic waste and reduce the wealth of the overall economy. What does this mean for startups? You compete for customers on performance, ease of use, or price. Well organized incumbents will fight if they perceive a threat to the status quo.
As a result disrupting the status quo in regulated market can be costly. On the other hand, being a private and small startup means you have less to lose when you challenge the incumbents. Some investors and competitors may be concerned about regulatory risk and liability. When you get customer scale and raise a large financing roundtake the battle to the incumbents.
Strategies at this stage include:. Listen to the post here: They have a bitcoin will succeed despite opposition just like tesla did over a distribution system that drives up prices while stifling entrepreneurial activity. More proof pun intended that legislators do not care about anything but getting contributions to get reelected, and routinely sell out their constituents for just a very few dollars…. Bitcoin will succeed despite opposition just like tesla did that industry is written into the Constitution, so very little change for meaningful reform.
Interestingly, I think something similar is going to happen with bitcoin will succeed despite opposition just like tesla did as it becomes more mainstream.
In Texas there are basically only a handful of Beer and wine distributors in the entire State. It must be considered that there is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order, and only lukewarm defenders bitcoin will succeed despite opposition just like tesla did all those who would profit by the new order; this lukewarmness arising partly from the incredulity of mankind who does not truly believe in anything new until they actually have experience of it.
Shorter version courtesy of Jack Welch: Established companies spend lots of resources learning to survive and prosper in a given environment. ANY change—even an ostensibly beneficial one—is likely to be perceived as a threat.
Thanks Steve, for bringing up an important and seldom mentioned problem in the American economy. Keep up the good work! I found a couple typos: Or…life will be better for consumers, students, etc.
This dynamic also occurs in networked markets where very large PE Driven messaging services rollup several former competitors, and use their layer seven routing border power to harm the smaller, innovative competitors. Such is happening in Loren Data Corp v.
GXS, presently having gone all the way to the Supreme Court. I believe the majority of new jobs are not created by Start-Ups, but by those Start-Ups who survive for 2 or more years and begin hiring for expansion.
Steve reminds us that innovation, while an economic necessity for job and productivity growth, has many enemies. Entrepreneurs must be aware of the battlefield they are entering and must avoid a frontal attack when entering a market that will cause the incumbent reflux.
Entering downstream markets that lack the interest of the incumbent s is usually the way to go. It will then take time for the incumbent to wake up to the fact that there is a battle. I am experiencing this from our VA right now in Hawaii as we work to help Veterans rebuild their lives. While our goal is to work with the Veteran in the community the VA is acting like they do not want us to have that ability.
This has encouraged me as I will be continuing to define our space, I now know that someone else sees the truth about the establishment. Thanks for sharing this information: Extremely well said Steve. It seems that no matter how many times history plays out the hand dealt to inefficient markets, the next inefficient market to be assailed wails in protest. This huge increase in the market and volume has increased the need for professional help.
SPEC folks raised up against the crowdsourcing of graphical design work. So, instead of getting this seriously value added service, we paid through the nose for a few logos that in the end did not really coalesce into a nice U.
There is no need for graphic designers to panic. By making the access to truly commodity graphics services very cheap and efficient, the budgets available for the skilled work that can never be commoditized will increase. The overall takeaway — navigating the regulatory process for startups requires the same type of improvisation and focus as other parts of the bitcoin will succeed despite opposition just like tesla did — strikes me as correct. Three additional observations about this topic: Those of us in the tech community — me included — are often guilty of rhetoric celebrating a new industry as an unmitigated good.
And 2 for new companies in regulated industries, the political process can be viewed as a double edged sword. Yes, the regulatory process provides opportunity for incumbents to slow or frustrate entry of startups. And 3 it is under appreciated how profoundly social media has leveled the playing field for startup voices in the regulatory process. More locally, here in Colorado, Uber put on an impressive grass-roots bitcoin will succeed despite opposition just like tesla did court press that favorably helped its cause.
This is a trend to watch going forward. With further iterations, more and more of those same companies are being horse traded with and the opposition is being softened.
Lobbyists are rent seeking specialists. As long as there is an advantage to doing so, businesses will compete as hard in the regulatory game as they do in the marketplace.
My point is that the costs for startups and emerging companies to aggregate their interests and participate before legislative and regulatory bodies have dropped in a manner that few have noticed. But the playing field for startups to band together, while not by any means level with incumbents, is more playable than bitcoin will succeed despite opposition just like tesla did the age before social media.
The key idea is that rent seeking behavior creates nothing of value. By connecting these thoughts without qualification, you create the impression that all government regulations concerning public safety are forms of rent seeking. This is wrong to the point of recklessness, as countless examples of tragic fires and building collapses in unregulated overseas work environments have proven. To use two of your examples, Lyft and AirBnB create provider-to-consumer interactions that can be exploited by criminals in ways their traditional, regulated competitors do not.
Not sure that you read the entire post. Awesome that you take the time to reply, thanks. I did read the entire post, including the words you quote. And I agree with your larger point. The same thing has been happening with newspapers and legal ads, i.
State and local governments pay out our tax dollars to newspapers to print information that is easily accessible online for free.
They also force private parties to pay for these notices. During the housing downturn, this money poured into newspapers as foreclosures flooded the market, and each one required paid public notices to be printed.
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