The Netflix of…

I heard from a few readers about BookSwim which goes as far as using the term "Netflix-style" in the headline of their site to describe what they do. It joins sites that are the Netflix of watches and the Netflix of handbags. Apparently, inventing the wheel is hard, opening a wheel store is easy.

The thing about magical business models is that they are usually unique. A perfect storm, if you want a cliche. DVDs have the following attributes:

  • We’re already used to renting them
  • The renting process is fairly inefficient, sometimes horrible
  • We watch DVDs in a group and talk about them
  • They don’t weigh much
  • It only takes 2 hours to watch one
  • Many people have an insatiable desire (hundreds a year) for them
  • The sellers are an oligopoly and willing to dramatically discount wholesale pricing in exchange for volume
  • Investments in process can dramatically lower costs and prevent competition

So, while a few passionate people may wish for handbags or jewelry or books or watches to be available this way, none of them are even close to matching the dynamic of Netflix.

That doesn’t mean the entrepreneurs shouldn’t try. They should. A new business model offers way more room for a new company than an existing one. What it does mean is that they should accept the limited upside of their riff on the model and set their expectations and scale so that they thrive when they’re tiny, as opposed to waiting for a miracle to happen.