In Silicon Valley Winner Never Takes All

The New Yorker recently posted an article titled “In Silicon Valley Now, It’s Almost Always Winner Takes All”. It talked about Sidecar shutting down and gave you the impression that Silicon Valley-type businesses will either win or lose. Here, I will be discussing why many of their arguments were overstated and/or contradictory and that winner take all scenarios are more the exception than the rule.

The outliers

When I hear this argument, it is often accompanied by throwing out big names like Facebook, Google, eBay, or YouTube. It’s rare that I hear more examples than these, and further inquiries lead to blank stares. In other words, there are a couple of great examples of monopolies. However, how many companies can you find that aren’t winner-take-all? Hundreds? Thousands? One wreck on the freeway makes the evening news, while thousands of drivers making it home safely never make the headlines.

Even the outliers aren’t winner take all

Google is legitimately closest to a winner-take-all than any other. But do they really have zero competition? Although smaller and less profitable, Yahoo, Bing, and DuckDuckGo still make money each year. Apple is even starting to do online searches directly from their apps. Much of Yahoo’s and Microsoft’s failures are less about Google and more about them building a crappy product.

Google’s market is pay-per-click, not search engine

Although Google can be seen as the obvious leader (with competition) in the search engine space, they are not the winner-take-all in the online advertising space. There are plenty of small and large companies that compete for your marketing dollar. The real product they sell is the advertisements, not the search results.

Your company is not an outlier

The chances of you creating the next Google or Facebook are extremely rare. You would probably have better chances letting it ride on red in Vegas. Far too many entrepreneurs answer quoting Lloyd Christmas, “So you’re saying there’s a chance?”

The one-in-a-million wins are fun to read about. They are also marketed well to keep people pulling the slot machine lever. But for the majority of people taking big bets in Vegas, they go home empty handed. Those big casinos don’t pay for themselves!

Winner-take-all is a scape goat

I have been employed with companies that have shut down and they rarely mention what really caused them to fail. It’s difficult to admit that you were a terrible CEO, or you took a big bet and failed. It’s easy to blame things like winning-take-all markets, or other beyond-your-control variables to save face.

Become a weed

Part of the problem seems to be that nobody these days is content to merely put their dent in the universe. No, they have to f*ing own the universe. It’s not enough to be in the market, they have to dominate it. It’s not enough to serve customers, they have to capture them. (DHH — Reconsider)

Find a spot of ground, grow your business, and be a noxious weed for your competition. If Silicon Valley is all about “disruption”, then start “eating your own dog food”, “pivot”, and stop trying to “boil the ocean”. [insert more buzzwords here].

Being taken over by another company is not always a bad thing. You could be left “crying all the way to the bank” when Microsoft buys you out. Speaking of Microsoft, it wasn’t very long ago that they were seen as a unbeatable. Good thing nobody told Apple — Oh Snap!


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