Cups of Water

Companies, Strategies & Disruption Tactics

John Lilly
3 min readOct 25, 2013


My partner Reid has a fun metaphor he uses when he’s describing how companies think about their core strategies (which don’t change very much). He says that he thinks about a company’s strategy as a cup of water they’re holding, trying to keep as much water in the cup as possible at all times (and sometimes increasing it), while navigating the landscape around them. Trying not to lose a drop.

Competitors, partners, and other companies are doing the same thing, tending to their own cups of water, navigating their own landscape. Sometimes near where you are, sometimes not in the same zip code.

And added to this, every once in a while as you pass by a competitor, you might want to give a nudge, or a hard push — to make them lose a little of the water in their cup.

So overall you’ve got 3 types of actors here: companies protecting their cups of water; companies trying to knock other companies’ cups of water over; and the landscape that everyone’s navigating.

I love this metaphor, and it’s useful to think about in all sorts of ways.

This week I got to spend some time with Benedict Evans and Ben Bajarin, courtesy of Semil Shah, two extremely sharp, thoughtful & knowledgable analysts of what’s happening today with computing, and that was followed up by Apple’s marketing event the next day, where Apple notably reduced the pricing of OS X Mavericks, iLife and iWork to effectively zero.

Lots of gnashing of teeth, pontificating, blogging about it. Lots of misunderstanding, too. A few folks commented this week that Apple & Google (not to mention Microsoft, Samsung & Amazon) are all highly transparent in their strategies, but not everyone seems to understand them.

Here’s the frame that I use: Apple sells systems. Google sells services. Amazon sells content. Microsoft, in general, sells software, although that’s changing now.

Sometimes people call Apple a hardware company, but that’s not quite right. Others have said they’re a software company, pointing out that it’s the quality of the software experience that really sets them apart, but that’s not quite right either. Having watched Apple for nearly 30 years now, and having worked at 1 Infinite Loop, I really think they think of themselves as a personal computing systems company and always have. They sell systems that work. Samsung, by contrast, sells hardware — they’re not as complete in their systems ambitions as Apple.

Google sells services that help you do things, find things, buy things, learn things. They pay for them, in general, not by charging the consumer but by charging the advertiser. But they sell services.

Amazon, naturally, sells content. Microsoft has always sold software, but they’re clearly exploring each of these models: services (Azure, Office 365, Bing), hardware (Nokia), systems (Xbox, Surface).

So now back to Apple and this week’s price reductions. Pretty easy to see, in your mind’s eye, Apple taking care of their systems business, their cup of water — and thinking that getting people on the most modern versions of their software both increases the quality of the systems they sell and sort of pushes on Microsoft’s software-oriented cup of water.

But you can see it everywhere. In how Google pushes Android & Chrome — not as systems, but as service front ends. In how Amazon sells Kindle at break-even or a loss — to make their content cup of water more stable.

The thing that’s most confusing is that they’re all walking around, with their different cups of water, but in the same landscape (consumer mobile), at a time when human beings’ expectations of that landscape are changing very quickly.

Exciting times.



John Lilly

Partner @ Greylock, former CEO @ Mozilla, dad, husband, son, nerd