Memes like these harm more than they hurt. They don’t help fund great startups. They don’t help put capital to efficient use building financially sustainable companies.
While tech investors are sitting on cash waiting for the next Google or Facebook, they dismiss the next Coca-Cola, American Express, Fruit-of-the-Loom, and Heinz. And no, I don’t mean they are overlooking startups in sugary beverages, credit cards, underwear, and ketchup, but they are overlooking millions of companies in less established markets that could grow into companies of that scale.
They dismiss companies that have competition, thinking that winner takes all and unpassable moats are the only possible path to success, overlooking the fact that Coca-Cola reached its global scale with Pepsi as its rival. American Express had not just Visa, but also Mastercard. Heinz has a half dozen other brands directly competing with each and every one of its products.
I see these memes get in the way as I talk to potential investors in the Fledge alumni, especially those in Africa. So much of the capital flowing there is following these California-originated memes, ignoring the trillion dollar market opportunities that will be happily shared by a half dozen or more competitors, each of which can grow to billions of dollars of profitable scale.
Personally, I’d much rather invest in the African equivalent of 1875’s Heinz, investing now while it’s small, helping it grow to be national, then regional, then continental in size vs. trying to sort out which of the hundreds of fintechs might breakout to be another PayPal while all the rest end up as nothing more than yet-another failure on Crunchbase and yet-another zero for the venture capitalist who thinks markets with competitions are below them.
Wake up! Name 10 companies that control 99% of their markets. I can’t. Then go to your local supermarket, the main shopping street in your hometown, Amazon’s homepage, eBay, or even your local airport, and show me one brand that controls even 80% of their market.
Competition rules capitalism.