There are some extraordinary forces at work impacting Internet-based companies that are wrecking havoc on ‘historical’ business models. My two main points:
- Better Mousetrapping At Accelerating Speeds – Everywhere one turns to on the Internet, there is a recently launched and often dramatically improved version of whatever it is being pitched, whether it be content or stuff to buy. The idea that an Internet business, whether it’s a startup or one that has some traction, can make a claim that they have a “better mousetrap” vs. the competition has become less and less important in evaluating the future success of that particular company.
- Encroachment & the Blending of Businesses - The term “barriers to competition” used to mean something in the business world, but on the Internet, it is extraordinarily minimized. Most of the Big Guys now are encroaching, not unexpectedly, on ‘historical’ competitors at amazing speed; but also, and even more disruptively, they are moving in on guys that weren’t viewed as a competitive threat just a few months or years before. Apple renting movies. Wikipedia entering search. Google getting into every model it can think of.
My fundamental point here is that on the Internet, protecting the recipe to the secret sauce is nearly impossible. While there is certainly something to be said about getting to a ‘new place’ on the Web and staking a claim first, or even second or third, the speed with which others include it in their own business models is just extraordinary.