The end of competition.
And the rise of the trillion dollar company.
At business school, we studied the rise of globalization, which had been increasing for decades. A familiar story was told of two titans of industry dominating any given major market around the world (e.g. Airbus vs. Boeing), followed by an endless long tail of smaller players. What we didn’t learn that day was how the digital landscape could one day radically alter the status quo, not just for the gods but for mere mortals as well.
The end of competition, as we know it, is nigh
The Internet, unleashing unfettered connectivity and eradicating boundaries, has set the scene for unprecedented globalization; accelerated expansion that is almost hard to comprehend. Airbnb, as a potent example, is already in 34,000 cities. It was only founded in 2008.
Another great feat of the internet age has been the perfection of the marketplace concept. Traditionally, a marketplace would have been defined on a macro level as follows:
the economic system through which different companies compete with each other to sell their products.
The key phrase here being different companies.
Now consider the following definition of the marketplace concept:
A medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. The price that individuals pay during the transaction may be determined by a number of factors, but price is often determined by the forces of supply and demand.
The Internet has engendered the possibility for a singular company to become the macro marketplace itself, one homogenous medium; a perfect harmony of the forces of supply and demand, creating the possibility of the perfect price.
This cannot and will not be the case in every industry, I hasten to caveat. In certain industries, it makes sense for multiple micro marketplaces to co-exist within a macro marketplace(e.g. Amazon vs. Etsy). Where there is an inherent value in variation and an eclectic range of choice, there is the necessity and desirability for a heterogeneous marketplace.
However, in certain industries where subjectivity and personal preference is irrelevant, where there can be an objective assessment of the outcome of a product/service, it is possible for one singular company to dominate, to become the medium by which all relevant consumers and all relevant products/services connect.
Game Over
To illustrate this point, let’s take the tangible example of Uber.
Founded in 2009, Uber has since conquered great expanses of the world in a way that Alexander The Great could only dream of.
Transport. Movement. The desire to get from A to B. This is essentially a commodity service. Of course, there can be qualitative differentiation (luxury, cheap, large, small, fast, slow, the mode) but the successful end result is the same: you (or your cargo) arrive where you wish to be. Subjectivity and preference do not come into play. Therefore, there is reason to believe that a perfect macro marketplace for taxis or even transport itself, created by one player, could exist. A global logistics company even, previously unfathomable in business history; bringing all the demand and all the supply into one place, one perfect system. Decimating not just a main rival but, in the case of taxis, every single local taxi company in the world. Both titans and mortals. The feeble and counterproductive strike by black cab drivers in London serves as a poignant illustration of this.
Now, you may say there is no perfect system. You may well be right. For perhaps in its potential perfectness, lies the greatest imperfection of all: the end of competition as we know it; that necessary straight jacket of capitalism that keeps us all in check, that driver of innovation.
This isn’t a bold prediction of the future, merely an observation of what is now unfolding towards an inevitable conclusion. For the present is merely the near future continually unfolding.
Right now, it is a land grab. But the winner will take all. Omnipotence and ubiquity the spoils. Unless, that is, governmental or regulatory powers intervene. It is unlikely technology will be the differentiating factor of success either, for even innovation is losing its edge as the ability to rapidly copycat increases. Robotic drivers or self-driving cars could make things interesting of course. But most probably, investment, vision and an overwhelming ambition to dominate will be the key drivers. With over a billion in funding and more to come, Uber can become, in my opinion, the first trillion dollar company. Not just a company, but the first perfect medium: the most efficient marketplace for transport ever created where both supplier and consumer win. And potentially the first of what I would call many medium companies.
About the author:
Rossa Shanks is CEO and Co-founder of “I Know This Great Little Place…”, helping people find remarkable places and unforgettable experiences. Follow him on twitter for more thoughts on business, marketing and start-ups @rossashanks.
