Contraption Company Podcast

Thoughts on online work, dependability, tools, and craft

Philip: Hey, this is Philip
with a recording of an essay.

I just published at contraption.co it's
called innovation versus distribution.

Earlier this year, I attended a
talk in New York city by Vinay

Hiremath, co-founder of loom.

He explained that mental model that stuck.

with me.

Here's the model.

When it started competes with an
incumbent, it has an innovative

product, but seeks distribution.

The incumbent has distribution.

all, it's customers, but seeks innovation.

So they race, the startup tries to capture
the incumbents customers before the

incumbents can develop a better product.

Sometimes the innovator wins such
as when Google surpassed Yahoo or

the iPhone overtook Blackberry.

Other times the incumbent prevails in
the case of slack versus Microsoft teams,

Microsoft teams now reports about 10
times as many daily active users as slack.

Salesforce also stood the test
of time against many innovators.

Some ongoing races include linear
versus JIRA and chat GPT versus Google.

To win with innovation.

Small companies need to be hard to copy,
like Figma have strong network effects

like Facebook, or be ignored by incumbents
such as Lyft eschewing taxi laws.

Big tech companies should
not be underestimated.

They have become skilled at building
products and often let startups

do the hard work of validating
new markets before they compete.

There's sometimes engage in tactics that
are unethical and potentially illegal,

such as cloning features to stifle
emerging competitors, a strategy Instagram

notoriously employed against Snapchat and
later Tik TOK . These actions often go and

checked because if the incumbent dominates
the market, the startup may not have the

resources or time to pursue legal action.

I often think about this model because it
applies well to many markets as a startup.

You should ask, can
somebody just copy this?

As an incumbent you should ask,
are we nimble enough to keep our

product competitive ? Either way,
the first step to winning a race

is recognizing that you're in one.

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