Continuing an earlier discussion about creative destruction, today Brittany and Connor talk about innovation and how it can help an outdated product or company stay afloat when others have collapsed.
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Here’s a transcript of our conversation:
Brittany: Hi, Connor.
Connor: Hey, Brittany.
Brittany: So each of our episodes are short. We like to give little nuggets for families to go and kind of explore further. But one thing that I like to do is build on previous episodes. Cuz again, we, you know, these are 15 minutes long. We only get to get into the tip of the iceberg release. So today I want to build on one we did a while ago about something called Creative destruction. And for those who may not remember what the term means, it was, coined by a guy named Joseph Schumpeter. I may or Schumpeter better, I don’t know, something like that. We’ll put it in the show notes. But it’s basically creative destruction is when innovation in the market destroys one thing in order to make room for another something new and better. So, for example, you know, electric lights replacing candlelight or cars replacing, you know, a horse and buggy. So today I wanna talk about whether, you know, a seemingly outdated service or a project can actually survive creative destruction, what they can do. So, you know, a lot of similar companies, like let’s say a typewriter is not gonna be able to survive in a world of computers. Right? But today I wanna focus on something particular, which is something I bet most of our listeners have never even heard of. but that’s a blockbuster video. So Connor have you by chance, I know, right? What is a video even, a videotape, you know what a video is, but have you seen this documentary on Netflix? The last blockbuster?
Connor: I actually, just watched this a few weeks ago and I chuckled because a few miles from my home is an old blockbuster video rental store that has since been converted into different businesses that have come and gone. But they still have this sign in the parking lot, with the little, movie ticket logo that they had. The very distinct, yeah. And of course, the sign itself is removed, but the frame is still there. So you can clearly tell it’s the old blockbuster.
Brittany: It’s like a tombstone.
Connor: Yeah. It’s almost like they’re leaving it there as like this memorial to the way the world used to be. And that’s why this documentary for me was so interesting cuz it’s like, oh my gosh, that’s how the eighties and the nineties were.
Brittany: Yeah. And it’s, you know, there’s so many memories. I know that video stores for me hold a place in my heart. You know, back in the day that was how you knew it was a weekend. If you weren’t watching TGIF on ABC, which was like family matters in Full House, like the next day, that was Friday night, but Saturday night, that is when you and your family sat down, you rented a couple of movies, maybe if you had like three kids in your family, like each kid got to pick a movie, and you’d get popcorn and you know, it’s like the video store was a thing cuz you went and you had to, there was no database that you could Google, right? So you had to go down every single aisle and look for it. And I remember as I got older, because I was going to video stores probably until 2010, and then I was getting DVDs. But, you know, I would go on dates and that was a big part of the date is what movie is he gonna pick? What movie am I gonna pick? So I have so many memories. Connor, I’m sure you have a few memories too.
Connor: Oh yeah. I, especially loved, the what would they call them? Like the curated picks where the employees would kinda say like, you know, here’s what Dennis recommends. And so they’re al they were always on the end of the aisle and you have no clue who Dennis is, but it’s like, you know, suddenly I’m paying more attention to these videos because someone else has recommended, it’s almost like on Amazon or, you know, I mean Netflix itself has these things now where it’s like, oh, people who watch this also watch this. Right. And you get kind of that recommendation which steers your attention. This is actually, an interesting psychological principle called social proof. our minds, there’s a lot of interesting science behind this, but our minds are wired for seeking shortcuts. Or we look to other people, for, behavior. Oh, I, could talk for an hour that.
Brittany: I’ve never heard of this.
Connor: Okay. So, social proof is like when you buy something on Amazon, you’re looking at different kinds of competitors and you go with the one that has like 805-star reviews. Oh yeah, of course, this is the one that has like 20 and it makes sense, but that’s social proof. Oh, all these other people like this product, therefore it’s the one that I’ll pick. And so rather than doing your own research and rather than spending time, you know, really digging into the, you know, comparing and contrasting and whatever, it’s just like, oh, this is the one that everyone else is picking, so I’ll do it too. That’s social proof. That’s why back in the day with, you know, blockbuster, it’s like, oh, someone else has taken the time to recommend these. Suddenly I’m going to pay more attention to them than like all the random ones that it was just for me. Like the memories were almost like walking in a grocery store where there’s like 8,000 things to choose from. Yeah. And it’s like, oh, which one will it be? So yeah, lots of fun memories.
Brittany: So yeah, we both have those memories and it spent a lot to not just us, you know, to everyone. We’re not alone in this. Kids of the eighties and nineties, because you know what? I don’t think you could even, I don’t think VHSs to buy were even around until mid, no late eighties. Yeah. I think it was because I remember the first one my family bought was ET but it wasn’t a new release, it was just the first time VHS were affordable. So, for a long time, and that’s kind of how video stores came to be, is because you had VCRs, those came out that was revolutionary, but most people couldn’t afford the actual movies because they were like $75 in today’s dollars of, of money. And I mean, can you imagine that I get, we rent a movie on Amazon for $2, Steve, and I’m like, that’s a little pricey. Right? So that’s kind of how they came to be. And then it ended up being this, you know, amazing just memory builder. But what’s funny about this, cause we’re talking about creative destruction is that this blockbuster has managed to survive. And that’s kind of the premise of this documentary. But one side note I wanna get into before we get into this is the VCR in general, VCRs used to be cheaper back in the nineties than they are now. And it’s because they’ve become collector’s item. So this kind of goes along with the can you beat creative destruction theme because even though nobody’s, like, you wouldn’t think anybody is looking for a VCR, they’re not being made as often now. And so the ones that are being made are so nostalgic and people want them that like, I couldn’t find one under $130 the other day. Oh wow. Yeah. It’s not, yeah. So it’s, crazy.
Connor: Supply and demand, right? The supply has gone down. There’s still some demand and so the price goes up.
Brittany: Yeah, no, absolutely. and I think there’s another point to be made, and we’ve talked about this on a, previous episode, Connor is nostalgia, right? Nostalgia is a very, very powerful motivator. And as we were about to get into the story of this, this last blockbuster, I think that’s a key point in how they managed to keep, you know, a dying business relevant because it actually, started turning into this museum of nostalgia.
Connor: What I thought was interesting is that you know, they had like memorabilia, like, I don’t know if souvenirs is the right, you know, a good synonym, but they had things from these actual movies that were like displayed in the store and, and it was so successful. People would like to travel from all over the country to get the chance to like visit this, the last blockbuster, right? Cuz the company, is because of Netflix and other things, right? They were closing one store after another after another and it just wasn’t as profitable anymore. It, was way more convenient at first with like Red Box, you know? Or you’re shopping. That’s still people still. It still is. Yeah. They’re, still, there. I went to a store the other day and they had a red box machine outside, but that was like the big thing, right? With Netflix, you getting the movies, the DVDs in the mail.
Brittany: This was a kiosk. It was a very big deal cause you didn’t have to deal with anyone or get a membership cause you had to be a member to Blockbuster.
Connor: Absolutely. You’re just going there to get your groceries. You check out a movie, you drop it off next time you’re gonna the store. And so it became hard for Blockbuster to compete. And so they started closing a lot of stores shutting down. They just weren’t making as much money anymore. And yet there was this anomaly, meaning this like really different situation in, in Oregon where you had the last blockbuster they were hanging on for your life. And yeah, they had this memorabilia from different movies, like giving people a reason to want to come beyond just renting a movie or whatever. But like, it was almost like a tourist destination for people who were a little bit older be like, oh, I get to have the feeling of when I was a young kid about being in a blockbuster, even though there’s no way this business should survive anymore. Yeah.
Brittany: And again, like we don’t really even have use for it. I have a DVD player cause they’re not VHSs. I believe that they’re renting out DVDs for the most part. But I mean, I have a DVD player somewhere, but once Netflix started streaming, I stopped buying DVDs. So I mean, I would have to go buy a device or look for mine to even play it on. But like you said, people aren’t even really going to rent movies. I’m sure that they’re, giving them money for candy or something just to go into the store. But I mean, this has essentially become a museum. And the way they got this, is actually started as a joke. A late-night host was laughing that there was still a blockbuster. And he’s like, if the manager calls, I’m gonna give you Hollywood memorabilia cuz I don’t even know how you guys are managing to stay in business. And so they got ahold of him and they sent them all this stuff. And so it became, they were getting media too. So it’s not just that they were finding a way to cash in on nostalgia. They were actually, getting media which caused people to come over from all over the country. So how does this tie in with creative destruction, which we’re talking about? So the main thing with creative destruction is when companies refuse to innovate, they lose out to companies who are innovating. Right? And we’ve seeing this in real-time with, you know, taxi cabs and Uber. Part of the reason that the cab companies were so mad at Uber is because Uber was so convenient for people in our day and age, right? Everyone has an iPhone, everyone has apps. All you had to do was click a button and it came to you. But the cab industries, instead of innovating and maybe creating their own app or making it easier, cause a lot of cabs won’t take credit cards. And I mean, in this day and age, like I never have cash on me. I never have cash. I have Bitcoin and I have a debit card. So, you know, it just was completely inconvenient. Now, if they would’ve stopped trying to stop Uber and started innovating, maybe they would have been able to survive. You know, hotels are even taken a hit because Airbnb is so popular. Yeah. It’s the same kind of thing. So, if you innovate, you can figure out a way to, you know, to stay alive. And I think it’s really interesting that this blockbuster, they’re not doing anything revolutionary, right? They’re not, changing the way we watch movies. In fact, they’re arguably going backwards but they found a way to innovate in marketing because they’re like, all right, what do people want right now? And with the world changing so quickly with everything moving so fast, they tapped in on nostalgia. Just like we talked about in the other episode, people loving the show, stranger Things, because it talks about the eighties, and people who are now having kids are like, oh my goodness, I missed the eighties. I missed that time period. Right? And so they used nostalgia to stay afloat.
Connor: Brittany, I don’t know that I’ve shared this update with you, but I bought a Tesla a few months ago.
Brittany: I heard from someone else, I heard through the grapevine.
Connor: Through the grapevine. So I, indulged, I’m, a bit of a tech geek. I’m not a car guy at all. I don’t know cars very well. I’m, not a big car guy, but I am kind of a tech-gadgety kind of guy. And every time I drive this Tesla, I’ve got like the low-end one. I didn’t go crazy, but, every time I’m, driving this thing, I have a smile on my face. Yep. It feels like I’m in an iPhone on Wheels, You know, it’s just this fun gadget. Why I bring this up is, I remember about 15 years ago, I watched, or somewhere around that, 12, 15 years ago, I watched a documentary called Who Killed the Electric Car. I’ve never seen that. And I remember, I don’t remember a lot about it, but I remember that the existing companies of the, you know, petroleum gasoline based car, companies, they, they were putting these competitors out of business, they would buy these companies or they would buy the patents or the technology and then they would shut it down. Right? Because these car companies saw electric cars as a threat. And, rather than innovate themselves, I mean, cuz now we have hybrids and we have electric cars and all these things. Now they’re being forced to innovate in part, in large part because of Tesla just charging through and, and not, being crushed by their competitors. Like some of these early guys were. But it shows that the natural tendency of people is to avoid competition, is to try and shut down the competition. They, don’t want to innovate. They don’t wanna be forced to, to try and improve. And I think that really speaks to the problem that Blockbuster saw. It was really illustrated in this documentary. They interviewed like former executives with Blockbuster, who, you know, talked about some of the mistakes that were made and some of the things they didn’t see and so forth. And it’s interesting when you get into these big companies, you’re very used to doing things the way they’ve always been done. There’s the path of least resistance, meaning like, this is the safe way to go, the status quo. In other words, you know, this is what we’ve always done, so we’re just gonna keep doing it. And out of the blue pops up this competitor. Well, you can see them as a threat or that can be a good incentive for you to look at your own business, to look at yourself and say, okay, how can we improve? How can we do what they’re doing? We’re a bigger company. We’ve got me more resources. Let’s, you know, let’s compete against them and improve. And yet a lot of people resist that. It’s uncomfortable. They don’t want to be, as innovative as the young scrappy entrepreneur who’s willing to do the hard work, who’s willing to make take risks. and so yeah, like these companies, unfortunately, like a blockbuster, often go outta business because they can’t adapt with, you know, I think of like pizza delivery people. Well now you have DoorDash and Uber Eats and these companies, I, know several restaurant owners and they talk about how hard it is for the to-do Uber Eats or DoorDash because these companies take quite a bit of the money and you know, and yet they’re saving the restaurants, having to hire their own delivery people and do all that. And yet it’s a province like, well guys, you could have innovated, you could have figured something else out. You could. And yet you just did the same thing for decades of just hiring a delivery driver. And it’s like, well I use DoorDash all the time. I have their little like monthly membership cuz I use it so often. Cool. I didn’t know they had that. Yeah, check into that. And I love it because every day I have an abundance of, of selection. It’s not one restaurant or oh, you know, which I remember like even a decade ago or a few years ago, it was, okay, which restaurants around me deliver cuz I’m busy with meetings or lazy or whatever. And so few companies would deliver. And yet now you have, you know, DoorDash, Uber and Postmates and others that solve that problem. It’s a service to me. I like it. It is the creative destruction and it’s a missed opportunity for these restaurants to band together or figure out some other way to innovate. and so they lose out perhaps on a little bit of revenue because someone else innovated and they’re doing this creative destruction.
Brittany: And that’s why to me, it’s so genius that this blockbuster of all things is the last remaining one. And it’s managed to stay, you know? So I think it’s a really interesting just observation of the market and how people, how people choose what they’re going to buy and where they’re gonna go visit. So, I don’t know, I don’t wanna recommend the documentary to families because I haven’t seen it in a while. So I don’t remember all the content, but definitely, parents watch it. And if you decide it’s good for your kids, it is fascinating. I think it’s very fun too. I know Connor, you enjoyed it as well, so we’ll link to it, but I would say parents watch first.
Connor: Yeah, I watched it pretty recently. I think it was pretty family-friendly, but I didn’t watch it with kids in mind. And so yeah, you may wanna check on your own, but, some interesting economic lessons that you can, pull out of that if, you’re talking, to your kids about it. And well, I won’t give the spoiler for what happens to the last blockbuster, but it is worth watching and if for nothing else, the nostalgia, that you can gain from it. So, guys, thanks as always for listening. Go, creatively destroy, things in your life. What can you innovate? Let’s think about it. Let’s, build something and make the world a better place. Brittany, thanks as always. until next time, we’ll talk to you later.
Brittany:
Talk to you later.
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