Throwing Money Away

Ever heard of a $47,000 trash can? Well, a London-based company called Renew just created one with all sorts of gadgets and gismos.

What exactly goes into a garbage can with the price tag of a mid-sized luxury sedan? Lets just say that Kaveh Mamari, founder of Renew, had a vision to make the Mercedes-Benz of trash bins. He did this by adding LCD screens equipped with Wi-Fi capability in order to relay real-time information regarding world news, stock markets, advertisements, and much more. In addition, each bin is made of a durable material that can withstand deadly bomb blasts. Last, but certainly not least, these trash bins also have a separate slot for paper recycling in order to keep world a bit greener place. Perhaps people will have more time to separate their paper recycling from the rest of their trash while catching up on their shows that are being played from the side of the trash bin, or in this case, 'trash bomb shelter'. 

Looking a bit deeper, there is certainly a higher value, or CVP, attributed to the idea. Independent of the price tag, the newly designed trash bins may help keep cities cleaner because individuals may be more inclined to approach these bins. Additionally, the LCD screens may be a game-changer in terms of how information is delivered to individuals who are always on the move. These may also be of value to the advertisement industry, as they will offer them a completely new avenue to get word out about their products and services. 

Some may argue that this product may be the next Segway, yet others may say this idea is as dry as 'individually wrapped peanut butter slices'. Here is my assessment of how this products may fare based on Rogers' four factors to determine the likelihood of success: 

Compatibility: In term of its use as a trash can, this product will fit right in. The concept of integrating computer screens to deliver media to the public is still unique, and I think it will fare well with foot traffic. 

www.fastcoexist.com/1679281/the-wi-fi-
enabled-bomb-proof-trash-can-of-the-future

Complexity: The end users (trash creators, us) will be able to pick up on using these trash bins fairly easily. Conceptually, it will be an obstacle to overcome at first for many because they we have never seen such an upscale trash bin before. 

Trialability: Based on the article, the bomb trials were done in the deserts of New Mexico. This suggests that trails are feasible, however, it is still quite expensive to blow up a $50k trash bin to confirm that it's outer shell will withstand blasts. 

Observability: This is the factor I have the most reservations for. Observing trash generation, and this new trash bin's effectiveness will be challenging in my opinion, what are your thoughts on this one? 

Although the idea does seem a bit out of the ordinary, municipalities such as the London government have already signed multi-decade contracts with Renew to have hundreds of these trash bins installed throughout their streets by 2012. I am very interested to see how far these bins come along in the States, what are your thoughts on this product's expansion potential? Do you see Renew making an appearance in the emerging markets at all? 

The Dark Side of Innovation

I recently read this very interesting article on the WSJ's SmartMoney blog. In relation to our discussion last Tuesday about sensing opportunity, the article discusses some of downsides of the entrepreneurial process, particularly those that have recently risen around the current economic context. For the sake of brevity, I will boil down the main points in a list and provide my respective perspectives:

• According to the Small Business Administration, half of start-ups will fail within their first five years, and only one-fifteenth survive to see their tenth anniversary. Investors who choose to back such faltering start-ups also have a high risk of going bankrupt, or losing everything - 40%.

Starting a business is hard. Really hard.

This seems to align with Gourville's Degree of Product Change matrix; the vast majority of new products or services are not sure hits, and therefore won't take off. A lot of these new businesses tend to be small service businesses like home painting or lawn cutting, which might provide a marginal improvement over local competition, but are ultimately financially unsustainable. Tech start-ups tend to be long hauls, in that their ideas usually require a good degree of behavioral change for a minor-to-moderate product change.

• Angel Investors have been lowering their rate of new investment. In 2011, 39% of angel deals came at the start-up stage as opposed to 75% in 2007. David Brophy, a colleague here at Ross, reportedly said that it's easier to raise money for companies which have already been developing and that "There's been a cloud over the whole early stage market."

The new angel investing paradigm.

A large part of this has to do with increased government regulation of business and stricter fiscal policy, which pressures lenders into pursuing higher interest rates because of the increased degree of risk associated with rough economic states. At the same time, I believe it is important for investments to be made in new start-ups because they are the ones who spur the national economy by spearheading the job market... Right?

• Jobs created by small businesses peaked at about 4.65 million a year in 1997 to 2000; in 2010, new companies created less than 2.5 million jobs. Compared to the past, young companies are also adding fewer employees as they grow.

Survival of the fittest?

This is a more systemic problem because it illustrates the steady decline of a major business philosophy - that start-ups are absolutely essential to the revitalization of a country's economic state and productivity. The fact that fewer jobs are created from new ventures can be attributed to several factors, among them greater technological automation and increased risk aversion from job seekers and employers. However, a deeper issue could very well be innovative stagnation, where we as a society have grown so complacent with what we have that we are now less inclined to hop on board potentially awesome ideas that would otherwise have taken off. What do you think?