Constraints Beget Creativity

Complete this drawing:


An uninspired artist could easily come up with a solution that would not be appropriate to post here. And then there are brilliant solutions like this one by David Jablow:


Constraints can be seen as either an excuse to do something lame, or an invitation to do something extraordinary.

During the 2008 election, a couple of startup founders had some constraints. They were building a company where homeowners provided guests with an airbed and breakfast. They were also broke.

Given these constraints, Brian Chesky and Joe Gebbia created a cereal called Obama O’s. The cereal was originally intended to be given to hosts for use as a breakfast offering, but it quickly became a collectors’ item that sold for hundreds on ebay.


In order to think outside the box, first there needs to be a box. Life is a series of real-world optimization problems where we are constantly seeking the best available solution. In the absence of boundary conditions, the solution set is infinite and no one solution is better than another.

Given a blank canvas or a pile of money, the default action is to do what has always been done. Kellogs, with its billions of cash, hasn’t made anything interesting since 1953, when it created Honey Smacks, a cereal that is 55% sugar.


I guess that’s kind of good too.


What Does Full Stack Mean Now?


Once upon a time, “full stack” meant coverage of the technical layers, from server to user interface. That’s gotten too easy.

Chris Dixon and Balaji Srinivasan recently explained that the new full-stack approach is to build a complete, end-to-end product. One that covers all aspects of an industry: Technology, design, marketing, supply chain management, sales, partnerships… The best way to disrupt an industry is to rebuild it. New startups must go for the full Apple.

Airbnb is becoming a hospitality company, a standardized service that aims to control the customer’s travel experience from touchdown to departure. Other examples cited include Tesla, Warby Parker, Uber, and Nest. These are all clearly lifestyle companies. A full stack startup controls how customers live their lives.

Next month: Full stack startups control customers’ bodily functions.

Crowdsourcing an Efficient Market

Public hotel chains including Hilton, Marriott, and Wyndham are now implementing franchise growth strategies to ramp up a pipeline of new hotels and rooms in response to the strong recovery in the travel industry.

This recovery has been underway since 2009.

Source: Tourism Economics
Source: Tourism Economics

Industry disruptors like Airbnb and HomeAway spent the last five years eating the hotel industry’s lunch while hotel chains were still loading their muskets.

Construction takes time, and hotels can’t move that quickly. Crowdsourcing provides a highly-liquid, dynamic supply. Travelers don’t have to wait half a decade for Airbnb hosts to build new rooms to meet their needs. In times of low demand, hosts take their rooms off the market while hotel chains go through bankruptcy and consolidation.

Source: American Hotel & Lodging Association
Average Hotel Room Occupancy Rates. Source: American Hotel & Lodging Association

People have made noise about Uber’s surge pricing and Lyft’s Prime Time price increases, but this is how the principle of supply and demand works. How much would someone have to pay you to schlep passengers on New Years’ Eve? Or in the aftermath of a hurricane?


By providing higher incentive to drivers during times when they would probably rather be doing other stuff, supply increases to match the number of passengers needing rides. With a potentially limitless source of drivers, we quickly find an efficient market.

Regulations that cap prices or artificially limit supply enforce an inefficient market where supply and demand never meet.

Cities like San Francisco and NYC are finally issuing more taxi medallions for the first time in years. At the same time, GDP data show that prices for traveler accommodations are falling, and we’ll soon see a glut of empty hotel rooms. It’s hard to create an efficient market when moving at Gatling-gun pace.