In putting $750 million into Go2Net this week, Paul Allen has stuck a fork in one of the hoariest Internet myths, namely that in this market you’re either number one or nowhere.
While market leadership is good, and America Online, Yahoo and Amazon have earned their places in investors’ hearts, there is nothing carved in stone about any company’s leadership in this market. With the huge valuations placed on Internet companies today, in fact, leadership is shakier than ever.
Yahoo is a great company, but it’s very possible that its Web properties will be number four on the Web hit parade by year-end, behind AOL, Microsoft and Disney. Amazon.com is also a great company, but its leads in the video and CD sales categories are relatively narrow, and Barnesandnoble.com has not given up the fight.
Go2Net’s search engine is not the market leader. It has a host of valuable properties, but none has the dominance in its niche of a Yahoo, Amazon or AOL, let alone a Microsoft or a Disney. Yet Paul Allen, among the savviest of technology investors, is putting $750 million into this company.
Why? The most obvious answer is that he wants to duplicate the structure of AT&T, which with Tele-Communications Inc., @Home and Excite is bidding to control broadband infrastructure, access, and services. Given the shortage of Internet services that truly take advantage of broadband, and the small size of that audience, it makes sense to buy, then build portals, stores and services that take advantage of the capability, if consumers are to be lured to it.
The bigger lesson here, however, is for your store, and your business. You don’t have to be the biggest to make a big success. All you really have to be is Number One with your own customers.
What do you think? Let’s talk about it.