The title of this post is taken from the wrap-up of Jeff Bezos, Jack Ma, and The Quest to Kill eBay by Steve Yegge.
As I am now focusing on marketplace where network plays a major role in the business model, I’m particular interested in competition between marketplace, invasion of a emerging marketplace, and whether the network is a competitive advantage for the company (if it is, then first mover might have advantage).
One of life lessons learned in Steve’s post:
Don’t try to beat a network by making a clone with improvements. It ain’t gonna work. There is too much gravitational inertia in the original network; nobody is incentivized to leave it.
If competitors is an incumbent with its own network, then it can leverage the network and launch a product with different value proposition.
Depending on the market size and capital required, the potential competitor probably can build a competing network(rather than beating) with an improved network.
[Where’s the moat?]
Except the switching cost resulting form network effect, it seems not many tools left for marketplace to tackle multihoming.
My current guess is that further lock-in might be created by non-monetary investment from users – UGC / Community depending on the business model.