8th
Startups Are Not Zero-Sum
Building web service startups is not a zero-sum game.
There isn’t a fixed amount of resources: bandwidth, servers, HR, ad-inventory. And, there isn’t a fix amount of demand: more people are coming online everyday and the usage of existing internet users is increasing. More money is being spent online every year. It’s all increasing and some metrics are even accelerating. Everyone’s payoffs in this “game” are different… what is a valuable user or interaction to one startup is trivial (or lead-gen) for another.
And yet, so often in the startup scene, the news and the gossip about companies is how they are all brutally competing, as if there can only be one winner. Almost any article on competition between two companies is titled something along the lines of “X feature is a Y-Killer”… where X is some tiny product design of a non-revenue generating startup and Y is a Fortune 500 company. I don’t fault bloggers for sensationalism (I’m guilty of it too), but I wish their posts didn’t repeatedly come baked with this zero-sum game mentality.
I know that the market for web services feels very competitive right now, but it’s important to remember that it is definitely not a zero-sum game. There is a set of services for which the market would feel more zero-sum: me-too companies which David Shen wrote extensively and lucidly about. Try to avoid fighting over the exact same slice of the pie as your neighbor… instead, work to build a bigger pie together.
And, if you ever feel like your competing over a fixed amount of user attention, make sure you’re looking at a long enough time horizon. I’ll close this post with a nice 10-year chart from the Pew Research Center that can help ground your sense of prospective. The pie is getting bigger everyday.
I definitely fault the press for being sensationalist. They fight tooth and nail to look objective, but that is so dry that the actual editorial choice of coverage degrades. An objective report about a murder is interesting. An opinionated analysis of a trend would also be interesting, but it isn’t allowed.
I’d even challenge Andrew’s idea that me-too startups are zero sum. They increase competition, certainly. But that likely leads to better products. I think a better product inherently has a bigger market. Even if the market stayed the same size and the me-too challenger dies, the original is still better, and so positive-sum.
