Here comes the singularity.
Be first in your own category is advice often given to entrepreneurs and startups. In the real world, the one with flowers and trees, business depends on the second brand to create competitive pressure. As Al and Laura Ries set out so well in their book, ‘The 11 Immutable Laws of Internet Branding,’ if there’s a Ford, there has to be a GM. If there’s a Costco, there will be a Walmart. The need for a second brand is driven by the suppliers, and by the customers. They ask for competitive pricing pressure because they want to comparison shop. If there were no second brand to compete, the dominant brand could do whatever it wants. It would be a monopoly. It would set pricing, availability, position on the shelves.
Does that monopolistic behavior sound familiar? It should, because it’s just what Amazon is doing right now. The internet’s 900-pound gorilla has been choking off the supplies of books published by Hachette and movies distributed by Disney. David Streitfeld’s reporting on this in the New York Times has been brilliant, and darkly funny. (He reported that Amazon, in attempting to make its case, misquoted George Orwell.)
One dominant player per category.
On the web, as Ries & Ries point out in their book, there can be only one dominant player in each category. So that would be Amazon in books. Books.com and Bn.com are afterthoughts now. Uber and Lyft are battling it out now for hired cars. Only one will dominate. This can be depressing news for a startup, but it’s not really.
You just have to be first in your own category. Alibris isn’t competing with Amazon directly as a bookseller, because it wants to be first in selling used books. Vimeo is trying to be different from YouTube by positioning itself as a service for video professionals. Seth Godin has written about finding success in a market by being a ‘category of one’ – your uniqueness makes you not only stand out, but stand alone in what you do.
You can do that with technology (SnapChat, WhatsApp, CrazyEgg), focusing on serving a community, (edWeb for educators, Evernote Food for foodies) or by offering something nobody else has thought of yet.
We can do it cheaper.
If you turn yourself into a commodity (‘We can do it cheaper!’) you will lose. There’s always somebody who will do it cheaper than you can.
Who will win in the crowded social CRM space? It remains to be seen. I’m watching Batchbook, SugarCRM, SalesForce, SproutSocial and Mention.