4 ms·

Could you give us a few examples of such businesses? Do customers really switch for marginal improvements?

kirillseva 9y ago
The usual example of switching Uber for Lyft when the rates on one app are lower than in another
pitaj 9y ago
I can give a few more examples where marginal improvements are not enough, which really boils down to "anything with network effects". - Messaging (WhatsApp, SMS) - Social Media (Facebook)
- usrusr 9y ago
  Steam entrenchement goes so much deeper than "just" network effect: DRM (and even DRM-less, to some extent, for convenience) requires trust and despite a choppy start, Steam has definitely built a lot of trust. Maybe even earned (debatable, but I tend to agree), but definitely built. Trust that they are likely to still be around n years down the line, and trust that they don't shove every imaginable profit maximization down their captive audience's throat. They have a headstart of more than a decade to any upstart and the growing of trust cannot be artificially accelerated. On top of that there are financials. Valve are not expected to disappear any time soon because of their huge earnings. Again, impossible to replicate. And they are a private, mostly (or exclusively?) founder-owned corporation, so there is at least a possibility of making "good enough" money, which is important for the "not shoving unwanted features down customers' throats" part. A VC funded startup, or worse, a publicly traded company could never reach "good enough" profits. It's the goose that lays golden eggs: a publicly traded company would inevitably keep rising into overvaluation until it eventually reaches the point where the only way to justify it is to cut up the goose in search of even higher profitability.
- Feniks 9y ago
  Valve made Steam literally into a Facebook and WhatsApp for gamers...
grigjd3 9y ago
Consumables are pretty easy to dive into but often don't leave room for improvement (already been done). Restaurants are similar. Thing is, these aren't businesses to dive into. The more "free" the customer, the more competition that already exists. Remember, if its easy to eat someone else's lunch, it's easy to have your lunch eaten.

The usual example of switching Uber for Lyft when the rates on one app are lower than in another

I can give a few more examples where marginal improvements are not enough, which really boils down to "anything with network effects". - Messaging (WhatsApp, SMS) - Social Media (Facebook)

usrusr 9y ago
Steam entrenchement goes so much deeper than "just" network effect: DRM (and even DRM-less, to some extent, for convenience) requires trust and despite a choppy start, Steam has definitely built a lot of trust. Maybe even earned (debatable, but I tend to agree), but definitely built. Trust that they are likely to still be around n years down the line, and trust that they don't shove every imaginable profit maximization down their captive audience's throat. They have a headstart of more than a decade to any upstart and the growing of trust cannot be artificially accelerated. On top of that there are financials. Valve are not expected to disappear any time soon because of their huge earnings. Again, impossible to replicate. And they are a private, mostly (or exclusively?) founder-owned corporation, so there is at least a possibility of making "good enough" money, which is important for the "not shoving unwanted features down customers' throats" part. A VC funded startup, or worse, a publicly traded company could never reach "good enough" profits. It's the goose that lays golden eggs: a publicly traded company would inevitably keep rising into overvaluation until it eventually reaches the point where the only way to justify it is to cut up the goose in search of even higher profitability.
Feniks 9y ago
Valve made Steam literally into a Facebook and WhatsApp for gamers...

grigjd3 9y ago

Consumables are pretty easy to dive into but often don't leave room for improvement (already been done). Restaurants are similar. Thing is, these aren't businesses to dive into. The more "free" the customer, the more competition that already exists. Remember, if its easy to eat someone else's lunch, it's easy to have your lunch eaten.