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Standing this weekend in the Oxbow Public Market in Napa, I realized that industries (online and offline) really do go through cycles of bundling and unbundling. In the food retailing industry, for much of human history groceries were sold in public markets with independent stalls and merchants. image

Perhaps most famous among these markets in modern history, Les Halles in Paris was a monstrous labyrinthine of alleys full of independent sellers of fish, meat and vegetables. It eventually shuttered in 1971 though even by then, the rise of the supermarket was underway.

Here’s a brief history of supermarkets from Wikipedia:

In the early days of retailing, all products generally were fetched by an assistant from shelves behind the merchant’s counter while customers waited in front of the counter and indicated the items they wanted. Also, most foods and merchandise did not come in individually wrapped consumer-sized packages, so an assistant had to measure out and wrap the precise amount desired by the consumer. These practices were by nature very labor-intensive and therefore also quite expensive. The shopping process was slow, as the number of customers who could be attended to at one time was limited by the number of staff employed in the store.

The concept of an inexpensive food market relying on large economies of scale was developed by Vincent Astor. The concept of a self-service grocery store was developed by entrepreneur Clarence Saunders and his Piggly Wiggly stores.

Historically, there was debate about the origin of the supermarket. To end the debate, the Food Marketing Institute in conjunction with the Smithsonian Institution and with funding from H.J. Heinz, researched the issue. It defined the attributes of a supermarket as “self-service, separate product departments, discount pricing, marketing and volume selling.”

It has been determined that the first true supermarket in the United States was opened by a former Kroger employee, Michael J. Cullen, on August 4, 1930

Supermarkets effectively bundled all the foods you wanted to buy in an incredible convenient form in one location. They used their scale to deliver the bundle at a much lower price altogether but also more profitably for the merchant. You trusted the brand of the overall store rather than finding category leaders in each sub section.

Now, starting with open air farmer markets nationwide and more and more curated indoor markets (Eataly in NYC, Ferry Building in SF, Oxbow in Napa), we’re seeing the reverse - a move towards unbundling services. There are specialists hawking their superior wares directly to consumers, and consumers love it. It’s possible this model is succeeding now because search costs of buying in these types of markets are lower through trusted curation and better direct marketing/research via the Internet. Also, the success may be rooted in general backlash against the modern supply chain which for concerned consumers requires too much search costs to know what’s inside what they’re buying. 

Looking at that one insight, it’s clear there are business opportunities in attacking massive e-commerce aggregators like Amazon who don’t control production supply chain or curate. Honest is a niche (though fast growing) company that curates the supply side and certifies its family products to be non-toxic — though it has massive opportunity to expand into new verticals as the leading “non-toxic” brand. Clearly, they’ve successfully unbundled the offering of a much larger retailer by focusing on this one case.

It’d be great to see a breakdown of Amazon (and other major aggregators) by how people are unbundling it. One famous similar example is the graphic of Craigslist, which was the first to successfully unbundle classifieds from the newspaper industry (which themselves were a bundle of information goods). In the graphic below, you can see how different startups are now unbundling even Craigslist:


With all these examples, I’ve come around to viewing all businesses through this lens to understand certain strategies and decisions. Even companies that start off by unbundling may over time bundle goods (Zillow’s unbundling of real-estate but bundling of related services like home design). I think the critical factor for whether they succeed in their strategies is how “search costs” are changing based on technology and the business model used in the bundling/unbundling. 

For PaperG, we’ve unbundled advertising creatives from the general design bundle that Adobe and others offer. At the same time, in our new “creative management platform” product, we’re effectively bundling many of the technology solutions for problems stemming from advertising and marketing creatives: asset management, ad building from assets, getting approvals/feedback, optimization of creative, and reporting from the creative. These functions all used to have specialist softwares but as enterprises (brands, agencies, etc.) have needed to be more agile and responsive due to faster marketing cycles and more data, they need to get rid of the inefficiency of going to each software separately. We’re providing a common destination for all departments for advertising to get all their needs met for creatives. 

So, after thinking about these cycles of bundling and unbundling, I suppose you can’t even say there are only two types of companies in the world: bundlers and unbundlers. Every business does both but the question is “to what?”

Cheap at sea, pricey on the plate: The voodoo of lobster economics

People often say “don’t fix what isn’t broken.” Said another way, keep doing what has worked before. The problem with this mentality is that what worked in one context may no longer work in the next. People often fail to update their assumptions and change their actions which is why I think many people’s careers stall and they don’t even realize it.

For people transitioning from individual contributor roles to more manager/partner levels, I often give this career advice:

"Most people assume just doing their current assigned job well is enough – so many associates at law firms think doing all the paperwork and litigation properly is the road to partnership, and many PR account executives think that getting a few articles written about their clients will earn them a promotion, but becoming a principal, partner, or senior executive with P&L-level responsibility requires a completely separate set of skills from entry and mid-level jobs."

A venture capitalist, whom I respect, has written about “crossing the people management chasm.” He contends that even after getting to the manager level, that there are multiple levels of manager roles that you can’t just re-use previous skills you’ve accumulated. \

First, you are a team lead who manages a handful of people with 50% of your time and still continue as an individual contributors for 50% of the time. Then you become managers of team leads who really are team builders and don’t do any individual contribution to a team’s effort. Last, you become a manager of managers who need to identify, hire, and evaluate managers whose contributions aren’t easily identifiable in the form of deliverables or individual work.

As managers move up these tiers, they often find that their previously finely honed skill set just doesn’t work for succeeding in the new role. The key is to understand this reality and assume you have to always be learning. Otherwise, you’ll stay stuck by doing the same old things but in a new position. This fact underpins PaperG’s culture and hiring requirements of finding people who are always learning and investing in their skill sets.

Promotion at PaperG on a managerial level is based on whether you’ve shown the abilities to do the next tier’s work rather than simply promoting you based on having done really well on your existing tier (this isn’t to say you can’t get salary raises for staying in your tier and just keep doing that well and better over time). We’ll do trials where you might get some managerial responsibilities on the next level and set expectations on what it takes to get the actual promotion. Otherwise, you end up promoting the managers who are absolutely terrible at their new jobs and can’t get promoted further but then keep their whole team down by being terrible in their current role.

Ultimately, I believe if you ever find yourself stuck in your career, you have to ask yourself if it is because what you used to do is no longer enough in your new role.  What got you here isn’t going to be what will get you there.


Recently, I was trying my luck fishing and was reminded of one of my favorite parables, “The Mexican Fisherman and the Investment Banker.”

An American investment banker was taking a much-needed vacation in a small coastal Mexican village when a small boat with just one fisherman docked. The boat had several large, fresh fish in it.

The investment banker was impressed by the quality of the fish and asked the Mexican how long it took to catch them. The Mexican replied, “Only a little while.” The banker then asked why he didn’t stay out longer and catch more fish?

The Mexican fisherman replied he had enough to support his family’s immediate needs.

The American then asked “But what do you do with the rest of your time?”

The Mexican fisherman replied, “I sleep late, fish a little, play with my children, take siesta with my wife, stroll into the village each evening where I sip wine and play guitar with my amigos: I have a full and busy life, senor.”

The investment banker scoffed, “I am an Ivy League MBA, and I could help you. You could spend more time fishing and with the proceeds buy a bigger boat, and with the proceeds from the bigger boat you could buy several boats until eventually you would have a whole fleet of fishing boats. Instead of selling your catch to the middleman you could sell directly to the processor, eventually opening your own cannery. You could control the product, processing and distribution.”

Then he added, “Of course, you would need to leave this small coastal fishing village and move to Mexico City where you would run your growing enterprise.”

The Mexican fisherman asked, “But senor, how long will this all take?”

To which the American replied, “15-20 years.”

“But what then?” asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You could make millions.”

“Millions, senor? Then what?”

To which the investment banker replied, “Then you would retire. You could move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

It reminds me that financial success isn’t necessarily freedom. It reminds me you can enjoy life and spend time with those you care about while providing enough to live on. Freedom comes making time as much as it is making money.

The Startup Mass Extinction