Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

Tag: tobias van schneider

  • The value of absurdity for innovation (and a story about tacos)

    Vegan tacos by Karolina Wiercigroch on 500px.com

    https://500px.com/embed.js

    “Great ideas alter the power balance in relationships. That’s why great ideas are initially resisted.” –Hugh Macleod

    I have been following the work and writing of designer Tobias van Scheider for quite some time now. If you don’t subscribe to his newsletter and you end up liking this post, you should consider signing up.

    Recently I stumbled upon something he published back in October called “Ignore Everybody”, where he argues that when you’re exploring something new – that could potentially fail – one of the best things you can do is ignore everybody. 

    And that’s because:

    “We have to understand that ideas are by nature very fragile. They’re like little naked babies, unable to protect themselves. If we really believe in a new idea, we have to protect her with great effort. This is difficult, because oftentimes the greatest ideas get killed by the people around us. Executing on a great idea is by nature a lonely path. If everyone would agree with you, the idea is probably not that great anyway.”

    I am incredibly interested in how new things get started and how new ideas thrive. Fostering innovation has become a critical component of city building in today’s world. But sometimes I feel as if we’re thinking too top-down, as opposed to bottom-up. 

    As Tobias rightly points out in his article, lots of great ideas started as stupid little projects. Who would have thought that a teen sexting app with disappearing messages (Snapchat) would become a company worth many billions of dollars?

    It’s for this same reason that Sam Altman of Y Combinator recently wrote that sometimes its better to call your new company a project, rather than a business. When you call it a business you impose all kinds of biases onto it in terms of viable business models, and so on. But when you keep it a “project”, it becomes more acceptable to be experimental.

    As an example of all this, I was fascinated to learn this past weekend about a Toronto-based ad agency called OneMethod. Because as part of their agency they have a division called the MethLab, where the goal is to simply experiment with “absurd ideas.”

    One of those absurd ideas was a social media campaign slash pop-up taco restaurant – remember, they are an ad agency not restauranteurs. It was so grassroots that they ended up having to sell original art work that happened to come with a “free” taco in order to get around all the legal requirements for serving food. Brilliant.

    The idea was so well received that it has grown into a fully fledged restaurant called La Carnita, which today operates across 3 permanent locations and happens to be one of the most popular taco restaurants in Toronto.

    But let me ask you this, if they had instead gone out to investors – as an ad agency wanting to get into the taco business – would they have been able to raise the money for their first physical restaurant? I can imagine this being a lot more difficult.

    On a larger scale, this is exactly what Google is doing with Alphabet. The company was reorganized and rebranded so that they could continue to work on absurd ideas outside of the Google cash cow. If the idea/project takes off, then it becomes a fully fledged company. If it doesn’t, then it gets shut down and something else is tried.

    This is what people and companies are doing today to stay relevant in the innovation race. 

    But in some ways it feels like a battle to allow the absurd to survive. That’s why the best approach might be to just ignore everybody. There’s value in the absurd but maybe you’re the only one who sees it right now.

  • The pull from services to products

    This morning I woke up to a fascinating post by designer Tobias van Schneider called: The agency is dead. Long live the agency.

    What he’s talking about is the phenomenon of design agencies being gobbled up or “acqui-hired” by product firms such as Facebook and Google. The latest of which is (or was) Toronto-based design agency Teehan+Lax. The partners have closed up shop and are in the process of moving to San Francisco to join Facebook Design.

    But what he’s really talking about is the pull from services to products.

    When you’re a services firm, you do work for outside clients and they pay you for that work. But there are only so many hours in the day, which is why the marginal cost of taking on new clients is relatively high – to scale up you generally need lots more people.

    On the other hand, when you’re a software company creating products, the marginal cost of serving additional customers is almost nothing. Sure, there are some variable costs, but the impact to your cost structure is not nearly as significant as when you’re a services firm. That’s how a company like Instagram can be bought for $1 billion with 30 million users and only 13 employees.

    So products are a bit of a holy grail in some circles. You can achieve greater scale. You can focus on fewer projects as opposed to jumping around from client to client. And you can make a lot of money.

    But it’s often easier said than done. Back in 2012, Teehan+Lax wrote a great post where they talked about the allure of products and the challenges they faced in trying to build their own:

    37Signals* was the worst thing to happen to services businesses trying to make products. They fucked it up for all of us, because they made it. For those of us old enough to remember, 37Signals was a services company like Teehan+Lax. They had clients and did work for hire. Of course, 37signals isn’t a services company anymore. They make amazing digital products and their success is enviable. (*37Signals became Basecamp)

    So why is it so hard to transition from services to products?

    Clayton Christensen, the father of disruptive innovation, says, “you can’t start a disruptive business from inside an incumbent one.” The incumbent business will always take the resources from the disruptive one. He argues that if you want to create a disruptive business you need to isolate it from the incumbent business. The disruptive business needs its own values, processes and resources to be successful.

    Regardless of whether you’re trying to build something disruptive or not, amazing products are hard to build. They take focus.

    But what’s also interesting about services and products is that there’s a parallel in the world of architecture and real estate development. As an architect, you’re basically a service provider. You have clients and they pay you for the work that you do. However, as a real estate developer, you offer a product: physical space. The cost structures are not nearly as beneficial as with software, but it’s a product nonetheless.

    And similarly, we’re already starting to see some developers bring architecture in-house. Will we see more of this in the future? Will there be a similar pull from services, to products?

    Image: Flickr