Today, US consumer tech is dominated by 4 companies with a combined 2.5 Trillion Market Cap. To put that in perspective, that is 10% of the US GDP. I’ll call this group AGFA:
- Apple: 872 Billion
- Google: 725 Billion
- Facebook: 523 Billion
- Amazon: 562 Billion
All AGFA companies reach all American consumers. They all have unlimited engineering and design resources. All are equally good at hardware and software. All 4 are extremely fast moving and innovative.
Before AGFA that there was Microsoft, AOL, Yahoo and hardware players like Nokia. Great, powerful companies. But not companies operating across all consumer markets, in both hardware and software. Not companies executing perfectly.
What, outside of AGFA is left for startups? Your AI startup? At best you are going to get bought by Google. Your killer new take on social? If Facebook can’t copy it fast enough, they will eventually buy you. Your e-commerce play? Almost certainly going to get crushed by Amazon.
The AGFA companies can copy, improve, iterate and out-market any idea that you come up with, if it’s in their sights. With one exception: marketplaces.
AGFA is not a risk to AirBnB, the marketplace for spare rooms and homes. AGFA is not a risk to Etsy, the marketplace for handcrafted goods. AGFA is not a risk to Uber, a kind of marketplace for spare driving capacity. AGFA is not at risk for Heal, a marketplace for home doctors.
Marketplaces can survive in an AGFA world because of network effects. If a marketplace has tens of millions of buyers and sellers, moving the same group of people to a similar marketplace just doesn’t work.
So if you are a startup, and you are interested in the consumer space, you need to think marketplace. It’s your only way you can possibly fight AGFA