What is the cost of a second-place product? Half. Your business could be 150% of what it is today if you were the leader. At minimum. This is compared to the next up in the market. Here are a few examples from the tech industry.
It’s hard to compare strict competitors. We’re looking at apples and oranges at best. Even when they’re public (along with much of their data). A lot goes into a product. Much more goes into a company. Beyond the company, the world is complex, and no single heuristic could tell us why a leader was the leader. But, that’s not going to stop us from talking about one: the single primitive.
Let’s play the hits, and list quickly each primitive from each leader.
Uber → the ride
DoorDash → the order
Google → the search result
Amazon → the product result
Facebook → the post
Netflix → the episode
Apple → the app
WhatsApp → the message
Uber, Lyft, and DoorDash
Why is it that Uber can dominate in rideshare and not food delivery? Using the single primitive heuristic: DoorDash is a better solution for ordering food delivery. There is one single path: ordering something delivered. Within the Uber app, you can order a ride or food.
At the same time, how can Uber dominate Lyft? The latter offers multiple types of rides: scooters, buses, and public transport. You can also rent a car. Uber is the best solution if you have in mind you need to get from A to B, in a car.
Apple
Let’s talk about Apple for a second. Because while it does have a significant market share, we called out the “app” here as the primitive, not the phone itself. Apple’s magic is that apps are apps (phone, text, maps, and all). The iOS product does not differentiate or special-case any application: reducing friction subconsciously.
Apple competing with Amazon for the best customer retention in the world. It looks like their device retention might be around 92% (source). But hard to put a timeline on this or truly compare it to Amazon’s Prime retention at 98% for year two (source).
Outside of retention numbers and charts, I think Warren Buffet (now one of the largest Apple shareholders) said it best…
If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it. If they tell you if you buy another Ford car — they’ll give you $10,000 not to do that — you’ll take the $10,000 and you’ll buy a Chevy instead.
Having a single primitive means you can reduce user friction: you give people less to decide, making it easier for them to use. The ease of use means they come back, driving long-term retention and ultimately growth. The single primitive contributes to market leadership. Fewer forks in the road are favorable.
The world is complex, and the heuristic of primitives helps make it a touch simpler. More below on the primitive concept if you’re interested.
I wonder where Coinbase fits in this narrative. First-place in crypto (US) but not globally, and not in fintech.