My name is Dez. Thanks for subscribing to my newsletter, All Things Venture, I’m going to use this newsletter as an opportunity to share ideas and perspectives on early stage entrepreneurs and their ideas. Each week I’ll share ~500 words or less on an entrepreneur or idea I’ve come across in the wonderful world of startups. Feel free to share with whoever, and feedback is always appreciated. Anyways, let’s get right to it.
This week’s idea is a new concept I’ve been thinking about called Format Innovation. What is Format Innovation? Well, I’m glad you asked. To me, Format Innovation is the process of altering the structure, packaging, or distribution of a product without adjusting the product’s core utility that unlocks value. Format Innovation exists when slight tweaks in structure create vastly different products. Take Twitter and Instagram. Both leverage massive amounts of user generated content, rely on network effects, encourage the distribution of personal information, perspectives, and affirmations to keep you engaged, and present communication as their core utility. While the core functions of these platforms remain the same, the primary means of communication (i.e the utility) on each platform is different. Twitter communicates through text (primarily) and Instagram communicates through images/video (again, primarily). These slight differences in communication are indicative of Format Innovation. They are also indicative of the ability for Format Innovation to unlock a tremendous amount of value.
A great recent example of Format Innovation is the app Clubhouse. At it’s core, Clubhouse is another iteration on social media, and the core utility of social media is communication. Clubhouse is described as, “an audio based social network where people can spontaneously jump into voice chat rooms together.” This nuance in format, the transition from text and video to audio, is the primary difference between Clubhouse and legacy social media. Is anything fundamentally different about the value Clubhouse provides to users? In my opinion, probably not. Clubhouse will still allow consumers to share ideas, perspectives, and information. Clubhouse will still operate as a product that leverages massive amounts of user generated content, relies on network effects, and encourages the distribution of personal information, perspectives, and affirmations to keep users engaged.
Now, why should anyone care about Format Innovation? Well, I believe it’s a helpful concept because understanding Format Innovation can help you predict what types of products create value, and building products that consumers value is essentially the name of the game for any early stage entrepreneur, investor, or employee. Said another way, understanding Format Innovation is that understanding with startups, you don’t need to recreate the wheel, it just doesn’t hurt to add rims.
That’s all for this week. Let me know your thoughts!