Yep, I know I’ve used one of the worst business clichés as the title of the blog – but just this once, it’s true.
On February 4th the Economist published an article entitled ‘A Fistful of Dollars.’ It referred to quite a lot of dollars – specifically a hundred billion of them – that was the value placed on Facebook for its IPO.
Here was a business started a mere eight years ago – almost as a joke – and run by a “cocky 27 year old,” that investors now rated as being more valuable than Boeing, the world’s largest manufacturer of aircraft. As the Economist asked, “Are they nuts?”
Let’s leave discussion of that to one side for a minute. Now consider this: if you don’t use Dropbox, or haven’t even heard of it, go here and have a look. Seriously: it is an invaluable tool. Now let me give you a few fundamental facts about Dropbox:
• It was started in 2007 by two graduates of MIT
• According to Wikipedia, it has received $7.2m in funding
• It’s now valued at anywhere between $1bn and $10bn
• As of October 2011, Dropbox has 50 million users
• It costs almost nothing to use – in fact 96% of Dropbox users don’t pay at all
• But most importantly, once you’ve used Dropbox, you simply cannot imagine life without it.
Now, for me, comes the really stunning statistic. Dropbox employs around 100 people. As a tweet from Drew Houston, one of the co-founders, recently put it: “We are a 100 person company and we serve 50m people. That kind of leverage has never existed before.”
Damn right. Facebook has over 2,000 employees and what? 800 million people with profiles? “A fundamental paradigm shift” is a much-overused business cliché, but if the staff to customers ratio of companies like Facebook and Dropbox isn’t one, I don’t know what is.
So Facebook has gone from a Harvard bedroom to $100bn in eight years. Where will we be in another eight years? I wouldn’t be surprised if it owned the American movie industry. I wouldn’t be surprised if it didn’t exist. But something will exist allowing people to connect, just as something will exist allowing you to share files with friends and colleagues and store them remotely. And whatever does exist, it will have a staff/customer ratio pretty similar to the ones I’ve quoted.
The world is changing, shrinking and at last, becoming truly global. Customers are starting to ask themselves questions that are unsettling for those of us running a business in North Yorkshire.
Why should I bother with an employment agency when I can go on Odesk or Elance and get a freelance contractor for a fraction of the cost of someone from the UK?
Why use a Yorkshire web designer when there are infinitely cheaper ones in Eastern Europe, India and the Philippines?
Your business is going to face competitors you never imagined – and technology is changing so much that these competitors will be able to do things that even a couple of years ago were impossible. So please don’t think you’re secure, because you’re not. Don’t think, “It can’t happen to me” because it can. As the Greeks pointed out, hubris is quickly – and inevitably – followed by nemesis.
Want an example? I’m delighted with the progress of The Alternative Board in York. Absolutely delighted. I have some outstanding clients; I love dealing with them; the future is bright. And what do I receive as I’m finishing my breakfast at Venturefest on Wednesday? An e-mail from a friend. Have you seen this, Ed? A new coaching/mentoring company that says they’re planning to open in York.
Did it give me indigestion? No. But if you saw me on Wednesday I hope you noticed a bit of extra determination. And not a trace of hubris…