B2B IT Forum: How the Cloud Enables Legacy Market Disruption
Executives from Hailo, Invaluable, CustomMade and HubCast shared stories and insight regarding how their companies are transforming legacy markets. While they are still relatively early on in their development, they have each made significant progress with some impressive stats and it is not too hard to imagine them becoming the Amazon or Orbitz of their industries.
Invaluable, a marketplace platform that allows traditional brick and mortar auction houses to bring their live events online, is radically changing a $50 billion, 1,000-year-old industry. Invaluable delivers 3 million unique visitors a month to virtually compete with those physically present in the room at a time when many auction houses are struggling to expand their audience (The site has more visitors per month than Christie’s and Sotheby’s combined). “We are eliminating a lot of friction – we don’t take possession of anything – just matching the buyer and seller,” and getting a commission for each transaction, said Invaluable CEO Rob Weisberg. The items include everything from Lucile Ball’s polka dot dress, to Lady Gaga’s acrylic fingernails, and even Monets. “Consumers are mobile and time-starved. The ability to be notified that an item is for sale on the other side of the world and you don’t have to get on a plane to go get it is great,” Weisberg added.
But hosting the world’s largest auction database (over 58 million records) requires a hybrid of public and private cloud providers, which together allow for spikes in traffic, zero latency in bidding (since the difference between winning or losing could be a second), and enable auction houses to access Invaluable’s database in real time.
Weisberg has a lot of experience with this ‘shift’. Prior to Invaluable, he was the CMO at Zipcar and before that, helped bring ordering pizza from Dominoes online with innovations such as the order tracker. Weisberg said he believes that the auction industry is rapidly moving to an online platform, forgoing expensive storefronts in order to reach a broader global audience.
Seth Rosen is co-founder of CustomMade, an online global platform that connects buyers with a network of 15,000 custom makers who create everything from jewelry, furniture, glasswork, and more. CustomMade also facilitates communication and monitors progress once a custom project is initiated. Rosen explained that the cloud allows his business to “dynamically spin up capacity at peak times. I would never be able to deploy this business without Amazon [Web Services] in the cloud. I take legacy industries and try to build software around them and the cloud enables me to…bridge that asymmetry” between buyers and makers. “I couldn’t justify purchasing hardware or getting space in a data center,” Rosen said.
He also articulated a vision where a consumer could see a bed frame at a retailer like Restoration Hardware, but instead of ordering from the store and having it made in Asia and then shipped around the world, the buyer would go to CustomMade and have a very similar product hand made by a local craftsman for the same overall cost, and with the ability to customize it.
Hailo, an e-hailing app founded in 2011 by three black-cab drivers in London, circumvents traditional call dispatch by allowing customers and drivers with smartphones to find the closest match directly, with both sides of the transaction paying a small fee to Hailo. The company has 50,000 drivers, and has served more than 10 million passengers, accepting a job every 3 seconds today. They have grown into new cities, which include Dublin, Toronto, Boston, Cambridge, New York, Washington, Chicago and Atlanta.
“We cannot scale without the ability to move quickly,” said Toby Ciottone, General Manager of HailoBoston. “The cloud offers that and…we wouldn’t be able to launch new cities the way we do without it.”
Ciottone was quick to acknowledge that Hailo is not the only internet-based disruptor to the driver dispatch market, but they have taken the approach of working with established medallion systems and drivers vs. other services which work with limo drivers or even individual car owners. Each of these services is essentially automating the dispatch function and showing it does not require human involvement to set up standard rides around town. While the taxi companies may still face requirements for other reasons, answering the phone to schedule a pick up appears not long for this world.
When a Forum attendee asked about whether any panelists were using predictive analytics, Ciottone said Hailo is always looking at what’s happening on a micro level and using pricing and incentives to affect supply, as well as analyzing the success rates of drivers (which in this case means how many jobs they accept). All the panelists agreed that the data they generate is extremely valuable. In fact, Invaluable sells some of their data to The Smithsonian so they can understand market prices for different types of goods.
HubCast CEO Tony Dolph said his business, part of the $300 billion North American printing market, is using cloud technology to facilitate the production and timely delivery of high quality printed material throughout global enterprises that need to get materials quickly. “Since the Gutenberg press people have been printing locally – but now the cloud allows this to be free of time and space…all your assets are digital and you print them when you want them and reduce a tremendous amount of cost, waste and time,” Dolph said.
Because the company has clients who print proprietary documents, HubCast uses RackSpace as its cloud provider because of its “deep service levels” and to ensure the tight security and high reliability.
“I think this industry will completely shift in the next five years,” Dolph said, adding that the business charges SaaS fees and makes money on ‘”the gap between buy and sell.”
“On-demand printing is the norm now,” he said. “The idea that you call three printers and wait two weeks is going away. There are 26,000 printers in North America, but at 40 percent capacity.” HubCast has a virtual unlimited capacity across its network of global printers.
The main message from these new cloud-based marketplaces was that the Internet equals democratization in their industries too, empowering them to dramatically change the value chain. They have asserted their right to play in their respective industries by leveraging the cloud and delivering value to both sides of their market while extracting their own healthy piece of the pie.