Russ Roberts recently podcasted an interview with Elizabeth Pape of clothing company Elizabeth Suzann over on EconTalk*. At one point (somewhere around 20 minutes into the conversation), Russ says:
This is such a 2017-, 21st-century story. And especially, given your price point and your production model, it’s really quite extraordinary that you seem to be thriving.
What is the story that’s so 2017? There’s a particular story of superstar firms and big retail players (which I find sort of depressing), but luckily there is also the one that Elizabeth Pape’s Company represents.
Elizabeth Suzann makes high-end women’s clothing (as in €150 shirts) and market it exclusively online. The company emerged in what looks like near-accidental fashion.
This is fascinating to me and I feel like we don’t talk enough about this mode of entrepreneurship (at least not in the business school where I teach). Sonali Shah and Mary Tripsas have done some work on it that I really like (here and here), emphasizing that sometimes (quite often, it turns out) the people who start successful companies ‘accidentally’ come to do so. They begin as users who make solutions for themselves and, because of various characteristics associated with that ‘userness’, end up growing through a very organic process of scaling up to match increased community recognition.
Why is this so 2017?
Finding a community or a group of like-minded people is easy and can happen in spite of geography over the internet, especially through platforms for small-scale producers (Elizabeth used Etsy) or community-specific ones (online forums, blogs etc). Taking the next step (marketing-wise) is also pretty easy – you can get a storefront website set-up without too much hassle.
This is not to downplay physical challenges (production is clearly not super easy, and scaling up with or without shifting production to developing economies will probably be a challenge at least for a while more), but technology clearly (still) makes new forms of organizations possible. It’ll be interesting how this particular trends plays out outside of high-end and very niche-y consumer products.
- What is user innovation, actually? At one point, ‘users’ were the new black of innovation and they are still a big part of the way that innovation will be changing in the not-too-distant future. I am going to outline the basic ideas in pretty short form and highlight some of the common misunderstandings of the ideas that I’ve encountered.
- Technology makes organizations. I’m going to move through the references to Chandler and Davis (and some other ones), talking about the rise (and demise?) of the corporate form, how technology drives that change and how it all spurs the gale of creative construction. It’ll take a few posts, I think.
* If you don’t subscribe to this podcast, I warmly recommend doing so: one hour of always interesting, high-quality discussion released every monday on a wide range of topics.