Chris Dixon rightly points out that lots of amazing phenomena have come up from nowhere, and are doing it faster — Instagram grew faster than Twitter and OMGPOP faster than Instagram etc.
And yes it’s overlooked how bad it is for incumbents:
It’s not clear this risk is priced into the valuations of companies like Facebook (P/E expected to be ~100) and Zynga (P/E ~31). In other words, faster velocity should lead to a narrower distribution of valuations from seed to late stages. We’ve seen the seed stage adjust but not the late stage. – Increasing velocity – Chris Dixon.
I do think the perception of unassailable scale at Facebook or Google or Microsoft is wrong.
Though these fast-growers lack things that the incumbents do have
– public market stock
– revenue generation machines
– global distribution reach on phones and internet
– well known names for normal users (who haven’t heard of Pinterest or Zocdoc yet)
– hiring flow and big staff management
This is surely central to how Google turned Youtube into the #2 site in the world.
What I find weird is that these huge players *don’t* buy more of these like we saw recently with Zynga-OMGPOP and Facebook-Instagram. They look for el cheapo acqhires.
Why didn’t Facebook buy Twitter (who is now stalking them) or Zynga (their top monetization engine) or LinkedIn? Coming up, won’t it be worth asking about why Facebook obsessed with mobile and missed Pinterest and ecommerce?
With these kinds of new players popping up faster, and looking less ‘durable’, it seems less reasonable to buy them out in the short term I suppose. But it looks like the network effects are fundamentally bigger than the social network.