most really successful companies do not reinvent themselves through periodic â€œbinge and purgeâ€ strategies. Instead they relentlessly build on their fundamental differentiation, going from strength to strength.
Network effects (direct or indirect) create the possibility of multiple (stable) equilibrium market configurations
What determines which equilibrium market configuration prevails?
What determines/influences expectations?
- Path-dependence (winner in last generation oftentimes expected to win in the current generation)
- Platforms might use non-price coordination instruments to affect expectations in their favor: e.g. First-party games/applications/content
- Public announcements & commitments (if feasible)
Here’s the link to the slides.
With an order of magnitude difference, expect vending machines to scale rapidly:
The economics make it easy to see why. Mall stores produce about $330 a square foot a year, while a 28-square-foot ZoomShop can generate $3,000 to $10,000 a square foot a year, Mr. Smith said.
The amount of money they are throwing around is outside the scope of what I do, but I admire their bravery and the place theyâ€™re creating for themselves in the market.
Benchmark is obviously in plenty of hot companies, too, including Twitter and Zipcar [which neither KP or Sequoia has backed]. Yet Groupon is another â€œhotâ€ company that youâ€™re not involved with. Why?
Right or wrong, in both group buying and in the membership-buying space, we had strong concerns about the barriers to entry. That may have been a wrong perspective. We met with a lot of these guys. But thatâ€™s why we stayed out.
What do you think now that Groupon ostensibly has a billion-dollar plus valuation?
Iâ€™ve heard incredible things about the company. I wouldnâ€™t have anticipated that they would do this well. Long term, I wonder whether the margin on a deal can be maintained when 10 [copycat] companies are calling on that same small business.
If you were to look at the performance of large funds (those greater than or equal to the vintage year median size) for venture funds between 1983 and 2003, just 2% of the large funds returned more than 2x contributed capital. And 92% of the funds returned less than 1.5x capital. But if you were 24-logo-1to look at the performance of the small funds (those less than the vintage year median size) for those same years, the performance is much better. Indeed, 48% of those funds returned 2x — or, put another way, small funds were 24 times more likely to produce returns above 2x than large funds. And just 36% of small funds returned less than 1.5x capital. Wow.
â€œThe number of companies that miss their first, second, or third quarter out is remarkably high, much higher than we think it should be,â€ says Duncan Niederauer, CEO of NYSE EuroNext.
I much prefer Seth Godin’s advice here:
Here’s the lesson: the ardent or insane pursuit of a particular goal is a good idea if the steps you take along the way also prep you for other outcomes, each almost as good (or better).