Law of Preferential Attachment

As explained in Wikipedia, "Preferential attachment" means that the more connected a node is, the more likely it is to receive new links." Look it up and read it and follow the links.

What this means in practical terms is that if we are entering a market in which there are 10 players already and one of them has 50% of the market the odds that a customer wil buy from the leading player are 5 in 10.

If the second leading player has 30% of the market the odds of that new buyer buying from second leading company are 3 in 10.

Finally, the odds that that new customer is going to buy from one of the remaining 7 players are 2 in 10. If the market is lucrative enough those last 7 players may do quite well sharing the remaining 20% of the market.

So here we come with our new company trying to compete with these 10 players when the odds of a new buyer buying from us are 0 in 10. How are we going to leverage our assets to be successful?

This doesn't mean the situation's inherently hopeless. We just have to come up with a disruptive product that will blow apart the old business model and over time seize a leadership position in the market.

Surely we can't come in there the same as all the others. We'll get killed. We have to be able to differentiate ourselves from competitors along some attribute that is important to consumers.

These days the dimensions along which one competes are cost, quality, convenience, access, and risk.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.