Monday, June 16, 2008

Are you my mother?


Supply chases demand. It's basic economics or is it? Is necessity the mother of invention?

Things change. The reason why is less clear.

Here's the conventional wisdom......


After enough people WANT something.....a market is created where the supply is then created. Usually by a few early risk takers when the market is small...then the demand reaches the "tipping point" and competition starts. With free markets, better products are created to meet the demand, in order to "differentiate" your product from the others. Then some people start to compete on price, often due to lower R&D or improved operations, or even conscientiously taking a loss on each product...known as a "loss leader". The it becomes what is known as a commodity where price dictates sales.

Would we have so much discussion (and debate) about alternative fuels if gas prices were under two bucks a gallon? probably not...or just the risk takers maybe.

As an Internet entrepreneur since 1996, I have a drawer full of ideas, some of which I've forgotten. What makes the contents of this drawer a bit interesting is that they are all "supply side" ideas. The market didn't exist yet. Didn't we all design Paypal? before it was Paypal. and who hasn't said "myspace sucks" but continued to use it.

I find the demand/supply economics incredible interesting...not just on the Web.

People can now pick the colors of their unborn child's eyes? Demand/Supply? or Supply/Demand?

We are seeding the ocean with iron to create more plankton that breath CO2 and produces O2. Demand/Supply?

We have created synthetic human DNA because we could. Must be supply side right?

Supply/Demand is the life blood and death venom for free markets...pay attention to it.

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