The market will always beat the technology

Every week some smart guy (or girl) comes up with some smart way of doing something better.

Faster internet. Card-less payments. Better online classifieds. Lace-less shoes. Whatever.

He then starts a business, launching his invention with the full expectation of market acceptance and imminent riches.

And then he fails.

What the aspiring entrepreneur did not realize is that success is not about technology. It’s about the market.

Just because you’ve come up with an online auction website that trumps e-Bay, doesn’t mean the market will adopt your solution.

In the case of a platform like e-Bay, the most powerful factor in market adoption is network effects: All the buyers are on e-Bay because all the sellers are there. All the sellers are on e-Bay because all the buyers are there.

That network effect is far more important than even a 10x improvement in user experience provided by a competitive online auction website.

Hence we still have e-Bay as the world’s dominant online auction platform.

Technology doesn’t matter. Only the market matters.

Before launching, understand the market.

Sign up for Daily Blog

Enter your email address to subscribe to this daily blog.