Time Commoditizes Every Advantage
Posted by Bob Warfield on May 25, 2010
“For over a thousand years Roman conquerors returning from the wars enjoyed the honor of triumph, a tumultuous parade. In the procession came trumpeteers, musicians and strange animals from conquered territories, together with carts laden with treasure and captured armaments. The conquerors rode in a triumphal chariot, the dazed prisoners walking in chains before him. Sometimes his children robed in white stood with him in the chariot or rode the trace horses. A slave stood behind the conqueror holding a golden crown and whispering in his ear a warning: that all glory is fleeting.”
– Gen. George C. Patton
Indeed, all glory is fleeting, as is all competitive advantage. Steve Jobs is one of the modern-day Pattons of Tech, very much in the mold of the George C. Scott movie character. He is a superb warrior who occasionally embarrasses himself through his ego, but who rarely loses the fight. His thirst for more glory in the form of more crushing wins for Apple is seemingly insatiable. But time is not on his side from many perspectives.
When left to his devices, Jobs will eventually spawn a product that completely upsets the conventional wisdom and storms the markets. John Doer has rightly called Apple one of the four horsemen of the Internet, and Steve Jobs is surely the rider and master of the horse.
Yet the very success Jobs craves drives competitors to extraordinary lengths to take the market back. Imitators come along and at first do poorly. But over time, they get better and better as Apple’s advantage gets less and less. Eventually it boils down to brand and fashion. Sure, its a nice polo shirt, but mine has an alligator or a polo player, so it has to be better. Time whittles away competitive advantage. It is relentless and cannot be bargained with. The only antidote is to keep running to produce more innovations. Apple is actually quite good at this, but they’re poised on a teeter totter of advantage that can come crashing down quickly as weight shifts.
Because their devices are better and came first, many more people use them. Because many more people use them, their ecosystems are more vibrant, which makes more people use them. It’s a virtuous cycle, but it is vulnerable.
Larry Dignan says the Android Tablet Armies are starting to form. He has a great insight in that the iPad isn’t as big an innovation as the iPhone was. In fact, it is many of the same innovations built on a different form factor. The world is further along at copying the iPhone, so therefore the iPad will enjoy an even shorter period of uncontested glory.
Google is already outselling the iPhone with Android during some periods. A growing audience is getting experience with both phones, and will write about the experience. Some people will choose the alternatives for reasons that Apple’s followers will scoff at–because they are cheaper, because they have keyboards (I know a lot of women who hate the iPhone because their long fingernails make the touch screen difficult), because they like Flash (and mobile Flash games are pretty cool), because the Kindle screen is easier to see in direct sunlight, because Android has tethering, to get away from AT&T, and on and on.
The other thing that happens is a peculiar emotion related to Schadenfreude (pleasure derived from the misfortune of others). We’re genetically wired to be wary of the most popular thing. There’s too much power there that can one day be used against us. In fact, you don’t have to watch the Tech Markets for very long to conclude it will be used against you–it’s only a matter of time. This genetic wiring is why the underdog always has a following. In this case, Google is doing a masterful job of positioning themselves as the good guys and the underdog, just as Apple’s share of these devices is huge and the value of their stock is soaring, even though Google itself isn’t exactly an underdog by any normal measure. It doesn’t matter, people crave an alternative to the leader. It isn’t safe when there is only one leader.
Startups take heed. A long time ago a very successful VC drew a chart on a napkin that he said was everything anyone needed to know about startups. It consisted of a line that popped up very suddenly and then grew slowly. Meanwhile a faster growing line starts a little later, but without the big initial pop. The initial pop represents the startup’s inspiration–the big idea that put them on the map, created most of the value, and then grew from there. The faster growing line represents the market trying to copy and commoditize the startup’s idea for their own advantage. We don’t necessarily know all the variables at the outset: how big is the pop? How fast can the startup grow? How long will the market wait before it tries to commoditize? How fast can it commoditize? What we do know is that when the lines cross, the startup is changed forever unless it can create another big innovation.
You can grow a startup to a big company either because all the variables line up right (you got a really big pop, you grew really fast, and the market gave you time to build up an unassailable lead), or because you keep building with more innovation pops. Either way, you’re running out of time faster than you think. Time commoditizes every advantage. All glory is fleeting.