Winner Take All

As summer reading for serious entrepreneurs.

Anita Elberse wrote Blockbusters, a well-documented study into why certain products dominate. In virtually every industry, the same pattern holds: a small number of winners capture enormous value. Everyone else shares crumbs.

This doesn't happen by accident. It happens because scale itself becomes an advantage. Once you're the biggest, your cost per unit drops. Once you're the most famous, everyone chooses you. Once you're best financed, you can drive everyone else out of the market.

This is depressing for most entrepreneurs. You already see it: I'll never be as big as Spotify, so why start?

But Elberse's work also teaches where the gaps are. Those gaps are places where Winner Take All doesn't yet apply. Where the market is fragmented. Where small players can win.

In the DIP framework sits the same question. If the economy drifts toward concentration, how do you design inclusivity? The answer is: you find the gaps. You find markets where scale isn't an advantage yet. Where a good team can beat big organizations.

That's why I see many DIP opportunities in genuinely local production. In things where transport is expensive. In things where relationship matters. In things where you can adapt faster than big organizations.

This isn't nostalgia. This is strategic economics.

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Source: Anita Elberse, Blockbusters (Henry Holt, 2013)