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> turn into a monopoly Sure, but how do you do that? There's lots of textbook stuff (patents/copyright/trademark, consumer habit etc), but in practice, you mus

> turn into a monopoly Sure, but how do you do that? There's lots of textbook stuff (patents/copyright/trademark, consumer habit etc), but in practice, you must continuously improve it, promote it etc, to keep that "monopoly". There's no monopoly; only temporary monopoly. [But I'm interested to hear your thoughts]

deleted 9y ago
[deleted]
danieltillett 9y ago
You will most likely need to work on maintaining your monopoly, but having a monopoly position in a small market allows you to extract above average profits without attracting competition. This is the path to quiet success. From a lifestyle perspective it is much better to be a small fish in a small pond than a big fish in big pond filled with sharks.
SwellJoe 9y ago
The more complex the solution, the easier it is to lock it in permanently. People don't want to learn a new complex thing. Note that this means the minimal complexity (or close to it). If you implement something that could be simple, and you make it complex, someone else will come along and make it simple and kick your ass at market. Imagine you've got a warehouse automation system (this is not an example of a $25 million dollar business, just an example of a problem that has no simple solutions) that is ten times as efficient for employees as the current pad-and-paper solution. If you arrive first and lock in that industry with the market leaders in owning warehouses, you don't have to worry about a competitor coming along five years later with a system that is eleven times more efficient than pad-and-paper and that costs 20% less than your system. It cost the company a half a million dollars to train all of their staff to use your system. It'd be crazy to migrate. So...not a monopoly, but a comfortable lock on a significant portion of the market.
- saosebastiao 9y ago
  You do know that there are thousands of companies in the warehouse automation space, right? And that "pad and paper" (whatever broad brush that is supposed to mean) isn't really used anymore for anything but small warehouses that wouldn't be a profitable target for warehouse automation software? And that there aren't any "market leaders" that own most of the warehouses...you'd have to lock up thousands of the biggest companies even before you got to 10% market share? I understand the point you're trying to make, but that was a terrible example. Even then, I don't agree with the answer. Complexity isn't a deterrent to market, otherwise some company would have locked up international import/export by now. The market's response to complexity isn't typically a monopoly but rather very fragmented hyperspecialization (which is the case for both international import/export and warehouse automation). What people are suggesting here is very well studied in economics: it's called a natural monopoly. And suggesting that you just focus on building a natural monopoly is about as facile as suggesting you just become a billionaire. Building a natural monopoly takes a mountain of time, money, and expertise. It's way harder to build a natural monopoly than it is to build a $1B business that has to compete.
  - SwellJoe 9y ago
    It was a hypothetical example. I know nothing about warehouse automation (though I know it is not using pad-and-paper as I assumed any intelligent reader would understand I was making up a hypothetical world where warehouse automation didn't exist yet), but I know it's complex and I know that if a company with a lot of employees trains them in a complex system, the odds of them changing that system are very low. And, as I said above: It's not a monopoly. But, it is a comfortable place to exist profitably without a lot of risk of losing your customers. Also, you've wholly missed my point about complexity. Some problems are hard because of external, uncontrollable, unpredictable, complexity. Import/export is that kind of complexity. I'm talking about predictable complexity. Again, to come back to warehouse automation as an example, which you hate, but makes my point. A warehouse has a lot of moving parts (people, machines, inventory, shelves, whatever TF), but it is finite and is a mostly closed system. The inputs and outputs usually match up, and you can predict what's going to happen with ins/outs and all the people and things that make the things move in and out. It is complex because it is large and there are a lot of people involved and many of them would need to be trained to use any new system that automates it. It is not, however, chaotic, and involving many competing factions, like import/export.

deleted 9y ago

[deleted]

danieltillett 9y ago

You will most likely need to work on maintaining your monopoly, but having a monopoly position in a small market allows you to extract above average profits without attracting competition. This is the path to quiet success. From a lifestyle perspective it is much better to be a small fish in a small pond than a big fish in big pond filled with sharks.

SwellJoe 9y ago

The more complex the solution, the easier it is to lock it in permanently. People don't want to learn a new complex thing. Note that this means the minimal complexity (or close to it). If you implement something that could be simple, and you make it complex, someone else will come along and make it simple and kick your ass at market. Imagine you've got a warehouse automation system (this is not an example of a $25 million dollar business, just an example of a problem that has no simple solutions) that is ten times as efficient for employees as the current pad-and-paper solution. If you arrive first and lock in that industry with the market leaders in owning warehouses, you don't have to worry about a competitor coming along five years later with a system that is eleven times more efficient than pad-and-paper and that costs 20% less than your system. It cost the company a half a million dollars to train all of their staff to use your system. It'd be crazy to migrate. So...not a monopoly, but a comfortable lock on a significant portion of the market.

saosebastiao 9y ago
You do know that there are thousands of companies in the warehouse automation space, right? And that "pad and paper" (whatever broad brush that is supposed to mean) isn't really used anymore for anything but small warehouses that wouldn't be a profitable target for warehouse automation software? And that there aren't any "market leaders" that own most of the warehouses...you'd have to lock up thousands of the biggest companies even before you got to 10% market share? I understand the point you're trying to make, but that was a terrible example. Even then, I don't agree with the answer. Complexity isn't a deterrent to market, otherwise some company would have locked up international import/export by now. The market's response to complexity isn't typically a monopoly but rather very fragmented hyperspecialization (which is the case for both international import/export and warehouse automation). What people are suggesting here is very well studied in economics: it's called a natural monopoly. And suggesting that you just focus on building a natural monopoly is about as facile as suggesting you just become a billionaire. Building a natural monopoly takes a mountain of time, money, and expertise. It's way harder to build a natural monopoly than it is to build a $1B business that has to compete.
- SwellJoe 9y ago
  It was a hypothetical example. I know nothing about warehouse automation (though I know it is not using pad-and-paper as I assumed any intelligent reader would understand I was making up a hypothetical world where warehouse automation didn't exist yet), but I know it's complex and I know that if a company with a lot of employees trains them in a complex system, the odds of them changing that system are very low. And, as I said above: It's not a monopoly. But, it is a comfortable place to exist profitably without a lot of risk of losing your customers. Also, you've wholly missed my point about complexity. Some problems are hard because of external, uncontrollable, unpredictable, complexity. Import/export is that kind of complexity. I'm talking about predictable complexity. Again, to come back to warehouse automation as an example, which you hate, but makes my point. A warehouse has a lot of moving parts (people, machines, inventory, shelves, whatever TF), but it is finite and is a mostly closed system. The inputs and outputs usually match up, and you can predict what's going to happen with ins/outs and all the people and things that make the things move in and out. It is complex because it is large and there are a lot of people involved and many of them would need to be trained to use any new system that automates it. It is not, however, chaotic, and involving many competing factions, like import/export.