This ties in with Clayton Christensen's work in The Innovator's Dilemma and The Innovator's Solution.
Christensen's thesis is basically that technological change is continuously creating Local Mins like point C, in the form of disruptive innovations. These are technological breakthroughs that target a smaller, less profitable market. Since they're less profitable, they're unattractive to established players, who're stuck at point B. However, their performance can quickly improve up to point D.
As a startup, you want to enter at point C and target point D instead of going for point B. If you head for point B, you'll face the incumbents, all of whom have more resource than you. If you head for point D, the incumbents have to go down through point C in order to catch you. They won't want to do so, because it's painful for them.
No one ever knows exactly what the curve after the current point is like, especially in a changing environment like in the web business. By taking risk one is able to check out if there's a higher local Max.
I would argue that every max you hit is a local maxima, you just have to be creative / innovate to find a bigger local max (untill possibly you hit some kind of insurmountable barrier)
Christensen's thesis is basically that technological change is continuously creating Local Mins like point C, in the form of disruptive innovations. These are technological breakthroughs that target a smaller, less profitable market. Since they're less profitable, they're unattractive to established players, who're stuck at point B. However, their performance can quickly improve up to point D.
As a startup, you want to enter at point C and target point D instead of going for point B. If you head for point B, you'll face the incumbents, all of whom have more resource than you. If you head for point D, the incumbents have to go down through point C in order to catch you. They won't want to do so, because it's painful for them.