The dumbest and most obvious of realizations finally dawned on me after trying to build a software startup that was based on quality differentiation. We were sure that a better product would win people over and lead to viral success. It didn’t. Things grew, but so slowly that we ran out of money after a few years before reaching break even.
What I realized is that lower costs, and therefore lower quality, are a competitive advantage in a competitive market. Duh. I’m sure I knew and said that in college and for years before my own startup attempt, but this time I really felt it in my bones. It suddenly made me realize exactly why everything in the market is mediocre, and why high quality things always get worse when they get more popular. Pressure to reduce costs grows with the scale of a product. Duh. People want cheap, so if you sell something people want, someone will make it for less by cutting “costs” (quality). Duh. What companies do is pay the minimum they need in order to stay alive & profitable. I don’t mean it never happens, sometimes people get excited and spend for short bursts, young companies often try to make high quality stuff, but eventually there will be an inevitable slide toward minimal spending.
There’s probably another name for this, it’s not quite the Market for Lemons idea. I don’t think this leads to market collapse, I think it just leads to stable mediocrity everywhere, and that’s what we have.
What I realized is that lower costs, and therefore lower quality, are a competitive advantage in a competitive market. Duh. I’m sure I knew and said that in college and for years before my own startup attempt, but this time I really felt it in my bones. It suddenly made me realize exactly why everything in the market is mediocre, and why high quality things always get worse when they get more popular. Pressure to reduce costs grows with the scale of a product. Duh. People want cheap, so if you sell something people want, someone will make it for less by cutting “costs” (quality). Duh. What companies do is pay the minimum they need in order to stay alive & profitable. I don’t mean it never happens, sometimes people get excited and spend for short bursts, young companies often try to make high quality stuff, but eventually there will be an inevitable slide toward minimal spending.
There’s probably another name for this, it’s not quite the Market for Lemons idea. I don’t think this leads to market collapse, I think it just leads to stable mediocrity everywhere, and that’s what we have.