Creating and Destroying Value…

In the backdrop of the 50+ Billion Dollar valuation of Facebook, I believe:

– The Value Creation Cycle period is getting completely crunched.

There is no better place to see this than in the Internet space.

Why?

Value creation in Business was partially always about getting massive number of people to buy your goods and products in large numbers and then managing to repeat that Cycle as often as you could.

So, a Benetton started as a small factory in Italy and became a global brand probably 30-50 years later. The same happened with Marks and Spencer, Kit Kat Chocolates or Perrier Water.

It would have been impossible to generate awareness, build distribution, do marketing, collect dues and service consumers in a few months across the world after starting up if you were selling Clothes, Chocolates or bottled water.

But if you started a site like Facebook or Twitter or Foursquare and YES – QUORA – millions of people across the world could log in, use your product day and night, fulfill their needs and start coming back for more!

The beauty of a web business is its infinite global scalability with almost no friction. And add virtualisation to it and you have a massive ability to create value almost in hours.

– The Value Destruction Cycle has also accelerated

The Internet is its own Demon…

Something hot today falls of the radar tomorrow and that destroys value almost overnight. Alta Vista, ICQ etc are such examples?

Our parents and grand parents can quickly name brand after brand that they bought – Radios, Gramophone Players and Toasters that they still regard as a great brand.

Some of those brands dont even exist today – Woolworth for instance, but they cant be erased from the mind easily either.

The real challenge is of OLD BRANDS in TODAY’s hyper communicative world.

Two teenagers I know recently went to Marks and Spencer & laughed at all the fashion they saw there. They not only swore never to go back but also made fun of the brand on Twitter and Facebook. Hundreds of their friends were influenced and never will ever go to M&S.

Here Today – Gone Tomorrow

We live in a Warp Speed World where value creation and value destruction will be tested by the brutality of Speed never seen before…