The last time i wrote, i was thinking about Peak Internet. Whether innovation in the world of web/mobile driven productivity is over. While i mentioned a few trends slowing, namely:
Mobile ubiquity, already happened.
Cheap Data(Mostly).
But what i missed was, fed-driven large scale quantitive easing and low-interest rate era post the 2008 GFC.
The reality is that, quantitative easing led to a lot of private money looking for yield, which in-turn enabled business models which otherwise would have had trouble existing(even with 6.6BN smartphones in the world). Companies used the excess cash to fund users to drive behaviours which would have built out slowly.
a. Flipkart(and others), discounted their way into building an ecomm platform.
b. Cab aggregators incentivised(through cashbacks and discounts) both demand and supply-side to increase density and supply of cabs across the world. Very unique business model which reduces price, increases demand by enabling excess car supply to be utilised as a cab.
c. Local Delivery(of all kinds), discounts to increase demand, but are the rake-rates sustainable?
Another phenomenon to observe was, funding of a lot of competitors which essentially did the same job for the same set of users, leading to a mega discount war but this kind of activity has become tepid with time.
With the current recession looming, plus the fed undoing quantitative easing and also increasing interest rates, the era of free money may very well be over for next few years, what happens then?
One pillar of the last decade of the innovation is gonna get undone, so how many of the above business models gonna survive the winter?