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Whether or not you’re profitable has very little to do with how valuable others think you are. And usually having competitors is something that validates your m

by dcow 3y ago

Whether or not you’re profitable has very little to do with how valuable others think you are. And usually having competitors is something that validates your market.

hef19898 3y ago
The same can be said about food delivery start ups.
Tactician_mark 3y ago
> And usually having competitors is something that validates your market. Don't users validate your market? ChatGPT has plenty of users, so I would think competitors only hurt their value.
- michaelt 3y ago
  Well, it depends. Clearly, you can be a company like Microsoft where nobody is challenging your dominance in PC operating systems, and you can make huge sums of money. So competitors certainly aren't vital. Or if you've cleverly sewn up a market with patents or trade secrets or a giant first-mover advantage or network effects, and nobody's got any chance of challenging your dominance in your specific market niche - again that could be highly profitable. On the other hand, if you're selling ten-dollar bills for five dollars, you might have millions of satisfied paying customers, but no competitors because nobody else thinks your unit economics make sense. Or if you run a DVD rental store, you might be profitable and have many return customers, but you might not attract competitors because they don't think DVD rental is a growth business. So some people consider a lack of competition an ominous sign.
iudqnolq 3y ago
> And usually having competitors is something that validates your market a whole bunch of AI startups were founded around the same time. surely each can't validate the market for the others and be validated by the others in turn
- TeMPOraL 3y ago
  The surviving ones can. The same way that multiple species of trees, growing on the same patch of the ground, desperately competing for sunlight, together validate that the soil underneath is fertile.

by dcow 3y ago

Whether or not you’re profitable has very little to do with how valuable others think you are. And usually having competitors is something that validates your market.

hef19898 3y ago

The same can be said about food delivery start ups.

Tactician_mark 3y ago

> And usually having competitors is something that validates your market. Don't users validate your market? ChatGPT has plenty of users, so I would think competitors only hurt their value.

michaelt 3y ago
Well, it depends. Clearly, you can be a company like Microsoft where nobody is challenging your dominance in PC operating systems, and you can make huge sums of money. So competitors certainly aren't vital. Or if you've cleverly sewn up a market with patents or trade secrets or a giant first-mover advantage or network effects, and nobody's got any chance of challenging your dominance in your specific market niche - again that could be highly profitable. On the other hand, if you're selling ten-dollar bills for five dollars, you might have millions of satisfied paying customers, but no competitors because nobody else thinks your unit economics make sense. Or if you run a DVD rental store, you might be profitable and have many return customers, but you might not attract competitors because they don't think DVD rental is a growth business. So some people consider a lack of competition an ominous sign.

iudqnolq 3y ago

> And usually having competitors is something that validates your market a whole bunch of AI startups were founded around the same time. surely each can't validate the market for the others and be validated by the others in turn

TeMPOraL 3y ago
The surviving ones can. The same way that multiple species of trees, growing on the same patch of the ground, desperately competing for sunlight, together validate that the soil underneath is fertile.