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I’m not always convinced Google, Amazon, etc can start a product and compete in a new market and have it work 100% of the time. These companies have plenty of their own flops. Many things come to mind: google plus, amazons smart phones, MSs acquisition Skype...

Certainly they have scale advantages, but there’s also diseconomies of scale that can work against them.

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They don’t have to be successful when the mere threat of their entry into a market can be enough to kill off (or suppress) potential competition.

I think the issue here is not the advantages or disadvantages of their scale.

Rather the chilling effect - the firms themselves (may be) slow to perceive the next iteration of consumer needs.

Startups on the other hand figure them out - and build a product.

The big fish/spiders, with their larger webs, sense the new upstarts and THEN build those features - and then go back to whatever it was that they were doing. The cycle then repeats.

As can be readily observed with the MS v Netscape battle over web tech (while called a browser war, my impression is that the browser was a proxy for getting a foothold in the server market).

Never mind that MS had pulled something similar vs Novell some years prior, by bundling a client with Windows and then marketing their Exchange server as a drop in replacement for Novell's Netware. Just set up a NT box in the server room, configure the PCs, and phase out Netware.

>>and have it work 100% of the time. These companies have plenty of their own flops. Many things come to mind: google plus, amazons smart phones, MSs acquisition Skype...

when it's your startup it's 100%. But they don't need to score perfectly always. They can raise your costs by 100 fold if they want, and if they fail, so what, they try another thing. Time and time again and still have tens of billions in bank. The startup has 4-5 months of salaries, if lucky.

The world doesn't need to be convinced, only the startup needs to be convinced of the possibility. It is intimidation not technical vetting of a prototype.

A lot of their power could come simply from raising risk. Cut the chances of success in half, and that nice investment opportunity no longer a good bet.

I almost quipped that vacation rental marketplaces may be the exception but then I remembered Expedia acquired a bunch of them, including a former employer so there went that.