Business

It’s all about low transaction, marketing and distribution costs. This excellent article explains the common denominators in the successful business models of Amazon, eBay and Netflix. All of these businesses exploit network-enabled low costs to mine huge and previously inaccessible market sectors amalgamating numerous tiny niches. There’s nothing really new here, but the article is worth reading because it explains so clearly what’s going on. It also reminds that current online retailers are essentially 1990s web-economy dreams made flesh. IOW, it wasn’t a bubble; today’s retail and marketing survivors arose from a combination of good ideas that were left over after the shakeout, and new business models built on the hard-won knowledge gained in what many people now deride as speculative failures.

(via Tim Oren)

UPDATE: What also strikes me here is the difference between Amazon et al‘s business models, in which most of the value is contributed by participants on the margins of the network, and the (unsuccessful) business models which software makers and others were promoting until recently, in which value flowed outward from the servers of some “service provider” or other. Of course David Isenberg said this years ago.

The Mrs. finally bit the bullet today and let her boss know that she will be opening up her own medical practice. This is a Chicago story because we’re swimming against the tide, moving from NW Indiana to Illinois while the big story is the tide of doctors going the other direction. So is it possible for a doctor to open up a brand new (no existing patients) practice in a state in a malpractice insurance crisis? We’re going to find out and I’ll be chronicling the story here and in my individual blog Flit(TM).

So I’m talking to a co-worker named Phil, and he tells me that he’s frothing mad. He’s been writing Cecil at The Straight Dope for months and never saw his question appear in print. The question in question is…..

“If intelligent space aliens were to land on Earth and present themselves, is it likely that we would find them using double entry accounting”

I had pretty much the same reaction that you’re probably having right now. He’s a bit odd, wondering about the way our new galactic overlords keep track of accounts recievable. But he clarified it and I realized that it was a very serious question indeed.

“Is double entry accounting just one of any number of equally good methods for managing scarce resources-or is there something that makes it uniquely fitting for the task?”

“Could it be that it’s prevalence in the business world owes only to the desirability of using a universally understood method? If not, is it superior to all other known methods? Could it even be thought of almost like being a law of nature?”

The main thing that I know about double entry bookkeeping is it’s historical impact. Used with the new Arab numerical system, it allowed businesses to expand during the latter part of the Dark Ages. In fact, some people even say that this accounting method spelled the end to the Medieval Period by promoting trade.

So are there equally effective methods out there? If so, why aren’t they better known? And, of course, is the system so tuned to basic reality that it could be thought of as a reflection of basic accounting truths?

I’ll leave it up to you guys. There’s got to be someone who knows this accounting stuff who’s also writing for this blog.

Brian Micklethwait may be on to something. Martin Devon is skeptical.