
Winner Takes Most - rock57
http://avc.com/2015/10/winner-takes-most/
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rwmj
Is there a business in creating/investing in only market follower companies?
They won't ever be the biggest, but they might take 10% of a market, and the
winner has done all the hard work of proving that the market exists and
creating a viable product.

~~~
runako
Being a fast follower is a very valid business strategy (see e.g.
[https://hbr.org/2012/06/first-mover-or-fast-
follower](https://hbr.org/2012/06/first-mover-or-fast-follower)).

Some fast followers actually do end up being the biggest. (In evidence is the
trope of the innovator's gripe that someone stole 'his' market.) See:
Microsoft (OS, office software), Apple (iPod, smartphones), Google, Facebook.
None were first to market. Google entered its market after search was
considered a solved problem.

~~~
jacquesm
To be fair to Google though, their search was orders of magnitude better than
the predecessors best (Altavista, Inktomi and a whole raft of others). If it
had not been for that then they would have been an also ran. I think the 'fast
follower' label should be restricted to be used when the new competitor does
something that is for the most part on par with whatever the original is
doing, only marketing it better or to a different audience. Otherwise it is
more of a 'fast innovator' or simply better execution.

~~~
runako
I guess it's a matter of perspective?

For example, tech people tend to single out Google as a 'fast innovator',
while attributing the success of Windows or the iPod to superior marketing or
some other aspect of business hacking (as opposed to perhaps their success at
building better product ecosystems).

One could argue that the iPod was a 'fast innovation'. Or conversely that
Google followed quickly behind a host of others, simply building on what their
predecessors had done before (and in some way at reduced risk, since 'Internet
search' was known to be a viable market at Google's inception). The categories
are fuzzy -- although hopefully not for those making the decisions!

Either way, the larger point I was making was that yes, being a fast follower
is a legitimate business strategy. There are a lot of risks to being first,
and the benefits of being first may not outweigh the risks.

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gbhn
"The Chinese have dealt with that issue by protecting their market."

Can anyone explain why this ends up not being a bigger international trade
issue? It seems to me like it would be a giant flashpoint, but it seems not to
be.

~~~
roymurdock
What makes you think it chinese protectionism would be a trade issue? Not
trying to be sardonic, just curious.

~~~
gbhn
My perception is there's dissatisfaction with Chinese trade in many parts of
American politics. So that there's an eleven-figure (or so) protection system
in place seems like it would trigger howls of outrage and condemnation, and
doesn't.

(I'm not sure it should, but "should" doesn't seem like a big obstacle to
political outrage, normally. :-))

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trjordan
Is this always true?

Or can we just not come up with compelling counter-examples, because the
brands that won in their category are more compelling than the brands that
split a category?

~~~
shalmanese
The IM market in the 2000s, a market where you would expect the _most_ network
effects, remained fairly evenly split between ICQ, MSN and AIM for a long
time.

This always struck me as one of the most interesting counter examples since it
seemed so utterly defiant of the model.

~~~
rtkwe
I think part of it is that with IM clients you're mostly talking to a closer
group of friends first then random strangers next so whatever your group chose
you would use but there was no strong incentive to join with what everyone was
using because you'd just be chatting with unidentified strangers if you moved
out of your friend group into chat rooms.

Also the barrier of entry is really low and there's minimal effort in using
two or more IM clients running, you could have both running and easily jump
into whichever had the group you wanted to chat with. And unlike social media,
like Myspace vs Facebook (when they were still competing), participating in
both wouldn't mean uploading everything twice.

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sharemywin
Death from a thousand cuts. The only way a distributed system could take on a
monster is by VCs investing in 50 $100 million dollar companies using a
distributed communication platform. Because the way it is now most of the
investments go to winner take all companies. And in order for the market to
use something different at scale it needs to be 10x. so a 50B company would
need to become a 5B dollar open market with 5 or 10 winners.

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willchang
Something's going on that's more than just network effects. Google was
arguably not the first dominant search/advertising company, and Facebook was
not the first social network, etc. But these companies can convince very good
engineers that it's more profitable to join them than to compete against them,
whereas their predecessors failed to do that. How they do this merits more
investigation.

~~~
jacquesm
> How they do this merits more investigation.

It's easy:

The first group they get straight out of the gate with the certainty of 150K+
salaries for as long as they're employed. Life-style adapts to new stream of
income, hooked, threat of potential start-up neutralized.

The second group goes against the grain, refuses the initial bait and starts a
competitor and then gets bought out at a significant multiple of their real
life value - if you ignore the threat to the top dog. If you don't ignore that
threat it makes good business sense.

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masonicb00m
"Lately, we’ve been wondering if there is an end to this pattern on the
Internet and mobile. We think it is possible that an open data platform, in
which users ultimately control their data and the networks they choose to
participate in, could be the thing that undoes this pattern of winner takes
most." Urbit?

~~~
jacquesm
Urbit is neat but ultimately not practical. It would have to be something
drastically simpler for end users and packaged in an extremely clever way. Not
everybody is born to administrate the systems that hold their data. A
federated social network that gains sufficient traction to warrant further
development would be a major achievement. (And if such a thing were to come to
fruit it should definitely worry linkedin, facebook, twitter and the remnants
of g+).

~~~
masonicb00m
Not practical in principle? Or just at this point in time? I think Urbit is
still in developer preview mode.

