It’s only Thursday but I’ve already heard the expression “the winner takes it all” at least five times this week.
The concept is where the winner of a market dominates the entire market. Think ebay for auctions, amazon for online shopping, google for search, facebook for social networks etc.
Often advocates of the “winner takes it all” theory also tend to believe that the best way to compete with the incumbant is too build a better/bigger mousetrap or create the “blah blah on steroids”
I don’t think about markets like that.
Often times the winner doesn’t take it all. And the best way to compete with the winner (or current market leader) is by either doing less (not more) and focusing on one thing and doing it very well. It’s actually the opposite of the “blah blah on steroids” approach.
Few examples come to mind:
1. Jobs.
The market leader for some time was Monster. This is a huge market but it’s certainly not a winner takes all market. Instead we now have powerful companies building tremendous value by focusing on different opportunities in the job market with different business models and different experiences (ie Craigslist, LinkedIn, The Ladders and Indeed).
2. Smartphone
Apple built the amazing iPhone, iTunes & App Store. Those things work together in a smooth & beautiful way. They are killing it right now. The alternative: Not an iPhone on steroids. Instead, Andy Rubin and Rich Miner created Android. A free, open source alternative. Absolutely brilliant. Google understood that vision and bought the company very quickly. I’m extremely bullish on Android’s opportunity with mobile devices.
3. Social networking
Facebook is the market leader for sure. But its not winner takes all because its just too big of a category for innovation & creativity. Right now my social network for music isn’t on facebook (instead it’s on hypemachine and tumblr). My photo social net is on tumblr and flickr. My social net for television is Boxee. My information social net is Twitter. FourSquare and Twitter are my social net for places & events. The list goes on.
There are many more examples (gaming, ecommerce, payments, browsers, etc) but this post is already getting too long for it’s own good. So let me try and bring this puppy home with one last thought.
At the end of the day, I believe that entrepreneurs are just too creative, too ambitious and too optimistic to allow for a winner takes all world.
