Why You’re Wrong About The Internet
What a new form of leverage means
Most people don’t truly understand what the internet means and are drastically underestimating its impact. Because the economics of media have changed on the internet, it’s become one of the most powerful tools for creating leverage we’ve ever seen.
Leverage is what separates you from the pack. It’s a force multiplier for anything you do.
Leverage is what creates a competitive advantage against the other companies in your industry.
All successful companies use leverage. It’s what creates the power used to leapfrog over the competition. Without some type of leverage to create an advantage, your business is nothing more than an easily-replicated commodity.
Without something to set you apart, you’re done before you start.
Look at any truly successful business and you’ll see a force multiplier used to create an advantage. Netflix, Google, Mcdonald’s in its Hay-day, and every other fortune 500 company uses leverage.
Leverage can mean a lot of different things, so let’s get down to brass tacks.
The Basics of Leverage
Leverage can be broken down into three categories:
All of the most successful companies today utilize one of these force multipliers. Real estate or the energy industry are examples of companies that tend to rely heavily on capital to produce their products. Think of traditional Fortune 500’s such as Walmart that utilize a large number of employees and extensive distribution to achieve everyday low prices and a constant flow of customers.
Examples of media and code as leverage are all around us, and they provide a look into the future of business. They are permissionless, frictionless, and compounding forms of leverage.
This is a significant and recent phenomenon. Up until recently, these three factors did not apply to media.
When talking about leverage, this specific form of media as leverage is what we mean.
Leverage Is Now Permissionless
In today’s world media is permissionless. You can become a celebrity, mogul, or talking head overnight without anyone’s approval. The only variable is: Is your message good enough?
In the past, this wasn’t the case. Everything went through a gatekeeper of the established media companies. Think of the old days where the main source of news was from the TV networks like ABC, CBS, etc.
Today, news, entertainment, and education can come from anywhere and anyone.
Leverage Is Now Frictionless
Media has taken new forms and is now frictionless. What used to take millions of dollars can now be done either for free or for a fraction of the cost.
Whether you reach one or one billion people, it doesn’t matter to the internet. There’s no friction — nothing stopping you from reaching the entire world online.
No more gatekeepers and the entire world is reachable with the click of a button: Permissionless and Frictionless.
It’s a good idea to use permissionless leverage because it is easy to implement and infinitely scalable.
Keep in mind: easy to implement, hard to perfect and utilize.
Everyone’s Doing It
All of the most successful companies of today utilize leverage that didn’t exist just a few decades ago. Think of the Amazon’s and Google’s of the world. These companies are built on the economics of today’s economy- one that is frictionless and doesn’t rely on the establishment to do anything. It’s a whole new set of economics.
Think of the most successful businesses in your local area. Most, if not all, are using permissionless leverage. They dominate the now commoditized world of media. Like the new giants of the world, they are taking advantage of the new technology.
What This Means
What does a world without permission or friction in the realm of media mean?
It leads to more opportunity- at the expense of consolidation among industries and a winner-takes-all environment.
What happens in a world without friction is similar to what happened between Google and Yahoo in the early 2000s. What allowed Google to win the search engine war was not a vastly better product. In fact, anyone who remembers this will recall that there was practically no difference between the two. A lot of people used Yahoo, and a lot of people used Google. Eventually, when google won out and dominated the search market, it was only marginally better than Yahoo.
This is an important point:
In a world with little friction between using one product or another, what’s to stop 100% of the market from using the product that’s 1% better?
This is the importance of leverage. It can create a 1% difference between companies, resulting in a significantly outsized proportion of market share.
This is the compounding effect companies now face when the lack of permission and friction collide.
Anyone can broadcast their message, and there’s nothing stopping them from gaining a monopoly on the masses.
Where Does It Lead?
We’ve already seen it in the technology industry. It’s affected fortune 500’s and global consumer brands. Those that adapt and dominate the new market conditions or are better than their competitors win. And they win big.
Think of Microsoft in the 1990s and early 2000s. This was our first example of a truly frictionless business environment. One player could lay claim to the whole pie. And Microsoft practically did enjoy a market monopoly. Then along came Apple. They used the same market forces combined with a stunningly good product to catapult Apple computers into the truly mainstream.
We’ve seen this in local markets. Where the local mom and pop shop, gym, or service business dominates social media with infinitely replicable posts on social media for the masses.
The truth is that most businesses lie somewhere in between, but they are all subject to the same market. The market determines who wins, and the market has dramatically changed over the last few years.
Leverage has changed and is now permissionless, frictionless, and infinitely scalable. Anyone can do it. Will you or your business take advantage of changing technology? Or will you sit and watch on the sidelines.
A better question may be to ask yourself: Are you blockbuster? Or are you Netflix?
Are you going to take advantage of leverage? Or not?
Hats off to Naval Ravikant, whose tweet inspired this article.
Originally published at https://ridgepointmedia.com on October 20, 2019.
