My three teenage boys love Sprecher Root Beer. Did you know you can buy Tab soda on Amazon.com? What does this have to do with venture capital? A lot actually. A huge amount of venture capital investment goes into companies based on the following thesis: “Even if we don’t succeed and become the Coca Cola of our market, we can be the Pepsi.” Or at worst venture capitalists believe they can fall back to being Sprecher (a high margin niche player) or Tab (a small, but never say die brand with hard core customers). Investors and entrepreneurs believe that markets are larger enough for multiple, successful participants.
However, you also hear a lot of entrepreneurs pitching businesses that they believe will be the Facebook, Amazon or Google of their industry. In other words, they’ll be the winner that takes all. Om Malik penned a fabulous article that explains how this work for the New Yorker. In Silicon Valley Now, It’s Almost Always Winner Takes All
But not so fast! Nic Brisbourne of Forward Partners thinks maybe not a recent post about Lyft’s strategy vs. Uber. And the LA Times did a great article about this rivalry and the fact that a lot of very smart venture capitalists think the winner doesn’t always take all.
Hey…one last thing
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