Gold, Silver, and Bronze

Winning a medal at the Olympics is a big deal for athletes all around the world. Obviously a gold medal is better but silver and bronze are pretty awesome too.

In startup land, it works out pretty similarly. In each and every big “winner takes most” market there is one big winner (the gold medal winner) and a few other big companies (silver and bronze) and then not much more.

If you look at web search, Google won the gold medal and has a $550bn market cap to show for it.

In social, Facebook won the gold medal and has a $360bn market cap to show for it.

In ridesharing, Uber won the gold medal and has a purportedly $60bn market cap to show for it.

You can do well with silver and bronze. Twitter is worth $13bn. Lyft is supposedly worth $5.5bn. But coming in second or third in a big market is generally an order of magnitude (or two) less valuable in the long run.

And you had better get on the stand and get a medal if you are working in a big “winner take most” market because fourth or fifth or sixth is rarely worth much, if anything.

These are high stakes markets where winning is everything and losing is nothing. And things play out pretty quickly. Within five years, we generally know who won, who placed, who showed, and who whiffed.

It is possible that with the emergence of decentralized networks these dynamics will change and we will be on to a very different market dynamic. But for now this is how it goes. Go big or go home.

#entrepreneurship#VC & Technology

Comments (Archived):

  1. pointsnfigures

    I finished that book yesterday (The Seventh Sense). Great read, but I would love to debate a few points with him. One is decentralized networks and the power of individual liberty. How many gatekeepers will there be in an economy operated with 100% decentralized networks? You could make the argument that there won’t even be bronze or silver depending on the business silo, and the regulation surrounding it.

    1. LE

      but I would love to debate a few points with himI always felt that that is something that disqus could do. That is create conversations around books by hosting a site where someone reading a book could interact with other readers. All in one place (not on the publisher site). Same could be done for other writing (NYT WSJ opinion pieces as only one other example).

      1. BillMcNeely

        Good Reads bought by Amazon ?

        1. LE

          That looks like a mediocre neglected book rating site. What I am actually talking about is a discussion site. Particularly what Jeff said “but I would love to debate a few points with him”.It could be expanded to topics of the day or any issue that people had an opinion on.

  2. jason wright

    The Olympic Games is an aggregator of the faster, higher, stronger sett.The blockchain will serve the slower, lower, weaker.

  3. William Mougayar

    That question was echoed by Brad yesterday during the interview (and it’s an important one). IMO, with decentralization, we will see an initial fragmentation of leading players, along with a wider distribution of wealth and benefits, but it may happen faster than in winner-takes-it-all markets. However, it’s not clear if that will be an interim/midterm situation or a long term one.

    1. jason wright

      And does the foundation model block incumbents from executing the standard response to competition by buying the competition?

  4. Vendita Auto

    Is finance the VC business steroid !!

    1. fredwilson

      Or it’s Wheaties

      1. Vendita Auto

        “Wheaties” Moses dropped a tablet !!

  5. Twain Twain

    Every gold medal — whether in Olympic games or in startup world — is a team effort. Behind Usain Bolt’s natural talent is an army of physicians, nutritionists, psychologists etc.Andy Murray needed Ivan Lendl as a coach to finally make that breakthrough to Gold.Ditto Facebook: Zuckerberg brought in Sheryl Sandberg.Founders need to source the right mentors and team for where they are in the curve.

    1. creative group

      Twain Twain:We agree that Sheryl Sandberg (Because she is bright) was instrumental in guiding Facebook in the right direction. But with the scale and following of Facebook do you really think Mark Zuckerberg needed Sheryl? (He did require someone but it could have been a number of bright women from Google). Trade Marissa Meyer and Sheryl Sandberg and the unique circumstances could have provided same results.

      1. Adam Sher

        If not Sheryl then someone else. Is it ever the case that a founder’s initial product is created in a way that scales to a business size that is exponentially larger?

        1. creative group

          Adam Sher:Many would claim that occurred with all of FANG.

          1. Adam Sher

            Perhaps it’s an essential trait of a successful ‘viral’ company. I wonder at what point in these companies’ lives, the founder/ceo stopped programming and managed the company.

      2. sigmaalgebra

        Sandberg is a COO. So, a COO knows how to run a big organization. The US is awash in successful big organizations with, right, successful COOs. These organizations are in government, the military, academics, business, charities, etc. The US is awash in people who know how to do very well at the routine parts of running an organization of 10,000+ people.

      3. Twain Twain

        Marissa Mayer and Sheryl Sandberg are smart, successful leaders in their own ways. However, we shouldn’t assume they’re interchangeable — just as we wouldn’t assume Paul Allen was interchangeable with Bill Gates or Larry Page with Sergei Brin or Steve Jobs with Steve Wozniak.function of success (Bill Gates x f(resources_invested) x f(market_demand) ≠ function of success (Paul Allen) x f(resources_invested) x f(market_demand)Even the smallest variations in team dynamics provide entirely different results.That’s why strategy is both Art+Science.

        1. creative group

          Twain Twain:We agree with your point. You are not understanding ours. We are saying with the same set of circumstances (Sheryl Sandberg noted to have declined the interests of Yahoo and numerous tech companies) the outcomes would have been similar if not exact based upon what challenges were faced. (Most likely the reason Sheryl never moved to face challenges outside the comfort of Facebook and her late husband’s advice)

          1. meredithcollinz

            “…similar if not exact”?Maybe I’m hearing it differently than you mean it, but it sounds like you’re talking about different yet similar kinds of widgets, rather than different HUMANS, all of whom are 100% unique, even when of the same gender.

          2. creative group

            meredithcollinz:The gender and intelligence are two attributes that bond both aforementioned women. We acknowledge they are uniquely different as the DNA of all humans reflect. We are outlining that if both were given similar circumstances that the results would most likely have a similar outcome. (Elucidating on our view on the post has reached a peak).

          3. meredithcollinz

            Perhaps then elucidate, even privately, on whether making very big assumptions based on very vague similarities, seemingly just bc they are women, has any other connotations or unconscious biases. Might also consider the reference to Sheryl never “fac[ing] the challenges outside the comfort of Facebook and her late husband’s advice” as well. It has a certain ring to it that perhaps you don’t mean.

        2. meredithcollinz


    2. LE

      With McDonald’s it partly was Harry Sonenborn who engineered the strategy of using and controlling the real estate.That said I don’t think there is any comparison with athletes to business people. While you could argue that luck plays a part in every success I think in sports luck is at the bottom and natural ability is at the top. I always like to think of Athletes as the most deserving of any praise that they get.

  6. Girish Mehta

    Not sure Uber has “won the gold medal”. That race is still being run.Also, the Google and Facebook valuations are public market valuations. Uber’s is not.

    1. Rob Larson

      Yes, but at this point Uber has a lead that is basically insurmountable by Lyft, Fasten, or any other startup competitor, at least until something groundshaking happens that changes the game. There is a virtuous cycle their lead provides: network effects + progress to date enables them to raise $ far more cheaply than their competitors, which allows them to invest at a greater rate, and widen their lead even more, and repeat the cycle.But you are right that the $ has not been cashed yet. Right now the best candidate in my mind for “something groundshaking” to happen is the switch to autonomous cars. When the technology is ready, Uber will start to deploy autonomous cars on its network, presumably at a much cheaper fee per ride. I’m guessing they will first buy a bunch of self driving cars to deploy in one city as a proof of concept, then let new owners of self-driving cars subsidize the purchase price by putting them on the Uber network all over the world to earn $ while they’re at work / sleeping.However: what if, at that time, Tesla has a 2 year lead in self driving technology over their competitors? (Not saying they will, but what if?). What if Tesla has at that time 500k cars on the road with owners ready to deploy them on a Tesla-owned car-sharing platform? There is risk there for Uber to get surpassed by Tesla at that transition.Ironically, (if this scenario were to unfold) one thing that might end up saving Uber’s bacon is local regulations. Since each state will have to change the law to allow fully autonomous cars free access on their roads, if they drag their feet it may allow other manufacturers to catch up to Tesla’s self driving technology (or rent it from Google) well before they become street legal. In that case regulators would be serving the same role they almost always serve: protecting the incumbent providers from competition from new, fast-moving attackers (usually startups).

      1. ksm88

        Count Waze (Google) in the race

        1. Rob Larson

          Good point – particularly with Googles self-driving car technology. If they can install their self-driving software on all the cars built by ford, toyota etc. then perhaps they can use that beachhead as a way to enable all those cars to join a google-managed uber-like ride-giving network.When other manufacturers start to realize how far behind Tesla they really are, they will become more motivated to work with Google’s technology.

          1. ksm88

            No wonder Google is pushing hard with its Android car OS. It’s gonna be very interesting to see how fast these companies will be able to break down legal barriers. The sooner they will, the bigger handicap the rest of the world – traditional car manufacturers – will have to face.

      2. Michael Babich

        Tesla has pretty big leverage here. It’s not only about having self-driving cars connected to a service, it’s about being able to control self-driveness and collect/analyse data from all of them. Tesla controls it. Imagine Uber using different brands w/ different driving logic/brains. Who is responsible for safety? Uber or car manufacturer when Uber controls the ride and route? Plus different brands would have differently trained AI and analysed routes.

        1. Rob Larson

          Yes, great points.

  7. jason wright

    Several blochain startups have or are attempting to form as foundations (e.d. Zug) or non-profits (German gGmbH et.c.), which means they are not limited by share and have no equity that can be acquired. The alternative for incumbents is to build their own blockchains but disaggregate themselves in the process. Expect to see several pseudo blockchains masquarading as the real thing quite soon.

    1. William Mougayar

      Well, we need to be careful and assess each case on its own merits. The ones that are full of air will be obvious hopefully.I hope we don’t get into a coin mania.

  8. Pranay Srinivasan

    technology is turning distributed, fragmented markets into winner-takes-all markets.

  9. TeddyBeingTeddy

    1st place: World record, greatest athlete in the world. 2nd place (by a nose): never heard of him.-Seinfeld

    1. Salt Shaker

      2nd Place Olympic Trivia: When Jesse Owens won Gold in 1936 (200m), the second place finisher, or Silver medalist, was Mack Robinson, brother of Jackie.

      1. Drew Meyers

        wow..i had no idea. that is a good trivia question. surprised that’s not more well known.

      2. TeddyBeingTeddy

        Never heard of Mack Robinson. ; ) that is a cool story.

  10. creative group

    Fred:This blog topic would be considered another of your insightful posts. Timely and on point.We reflected upon the Contributors we have viewed who have contributed posts that have been Gold, Silver and Bronze status. There are Contributors whose blog posts consistently can be considered Usain Bolt, Michael Phelps or Simone Biles or Gabe Douglas esque. We will not list any order or name because it may be subjective based upon a number of factors, social status, education, region, political affiliation, career success, etc.We have certified a couple of great posts as Platinum.

  11. Kent Karlsen

    I am not a socialist, but if the future business models and decentralized networks bring gold medalist where the other participants can’t make profit as the winner takes it all, I don’t know what is best – communism or capitalism (well ok, I still go for capitalism). But I hope new technology and networks like blockchain, can change how wealth are being created and spread in the global world. I am also happy to see at least a few VCs like UVC are willing to take risk in developing new technology. It’s bravery – like a gold medal for investors 🙂

  12. Girish Mehta

    From the Father of the Modern Olympics –

    1. LE

      That’s just him talking his game. He was in the business of encouraging as many people to compete and participate. Similar to how colleges want as many applicants as possible. (Not even close to the amount of effort and commitment for that..)Getting to the games has an impact on someone’s entire family in addition to themselves. While there is a clear upside to winning (or even getting to the Olympics) there is also a cost to be paid in terms of time, lost opportunity or possibly even depression after working so many years an not achieving a dream. (Phelps totally crashed after his spectacular wins and almost became bum like..)Agree that the struggle is important and fun in real life no question about that.

    2. Michael Babich

      Y Combinator should use this motto )

  13. creative group

    William Mougayar:In what sport do you feel Canada has the best chance to win a Gold in the Olympics?

  14. creative group

    Contributors:In your home country what Olympic sport has the best chance to win the Gold?United States: Every Olympic sport we compete. (It’s called confidence, only the loser thinking of anything enters it thinking they will lose)

    1. Adam Sher

      In individual sports, first time winners often speak of having significant doubts before, during, and at the moment of conquest. See Stan Wawrinka or Andy Murray in their early grand slam wins. It is a myth that the champions’ (with the exception of MJ) wins are buttressed by an unwavering sea of confidence.

      1. creative group

        Adam Sher:At the level we are referring we respectfully disagree. Review LeBron, Kobe, Tiger Woods, Joe Montana, Muhammad Ali, Nick Saban, etc. Winners win no matter the obstacles. They find a way to get it done. Inspite of the naysayers who proclaim all are equal and everyone shares their fears and doubts.A person can possess doubts and still be confident they expect to win.

        1. Adam Sher

          Of them, only Jordan really lives up to what you’re saying (must ignore Wizards). All of those others lost at some point in spite of their insatiable will to win. LeBron especially, which gave rise to the false notion that he was not clutch. Lakers in 2004/2008. I posit that an equally important mental factor is forcing yourself to execute your plan in spite of your nerves and doubts.

          1. creative group

            Adam Sher:Revisit Ali & Tiger winning from start. Breaking barriers, etc. We will just agree to disagree..

  15. LE

    Winning a medal at the Olympics is a big deal for athletes all around the world. Obviously a gold medal is better but silver and bronze are pretty awesome too.I was thinking about this yesterday after hearing about the woman who won the first gold for the US:RIO DE JANEIRO — American shooter Ginny Thrasher won the first gold medal of the Rio Olympics, pulling off an upset in the women’s 10-meter air rifle event Saturday morning.10-meter air rifle? I think that it’s better to have a bronze in a sport that everyone knows and ‘cares’ about like swimming (only one example) than a gold in a sport that is either obscure or that nobody has ever heard of. Better in the sense of what it can do for you career wise or even if your intention is to impress people.

  16. sigmaalgebra

    Fred, you are making a hidden assumption, that the three medal winners will be on the stand for a long time.So far that has been true, but there is no solid support for that situation. Instead, that situation is really just an artifact of some happenstance circumstances far from the business fundamentals.From some rock solid fundamentals, that circumstance — medal winners on the stand for a long time — is wide open to, to use a common term, disruption.Yes, the current medal winners were the very few out of the several or many, and the new medal winners will be similarly, but both exist.

    1. Michael Elling

      Networks are everywhere and have been around since the dawn of time. It’s just that we never relate them to the “digital” internet. It’s clear that the winner takes all model is actually the opposite of what people wanted; it’s anti-competitive, non-generative and unsustainable. Why has IPv6 taken over two decades to get to 20% penetration; despite its many benefits? The best metaphor for a digital network economy should be the human body. No dominant systems. Everything inter-related and inter-networked with lots and lots of incentives and disincentives; aka sharing in the reward and pain (cost).

      1. sigmaalgebra

        Amazon built a good Web site based on a good server farm. Good.Recently I bought something from Wal-Mart’s Web site. Wal-Mart has a way to go to get a Web site as well designed as Amazon’s.But, so, Wal-Mart just bought Jet or some such, likely to get a better Web site.But a Web site and a server farm — that’s now routine technology where Amazon soon stands to have little or no advantage. E.g., Microsoft also knows how to setup a good server farm with good Web sites and, no doubt, for no more than some reasonable, comparatively modest, consulting fees are willing to show and guide any good Microsoft customer.

        1. Michael Elling

          There are no price signals (incentives and disincentives) in the settlement free internet (IP) stack. That’s what I am talking about. The result is silos and everyone for themselves.

  17. Matt Zagaja

    A couple weeks ago I listened to a Gladwell podcast about college that made me rethink the benefits of this. Gladwell talked about the difference between weak and strong link games: in basketball it doesn’t matter if your worst player is really bad as long as your best player is really good, but in soccer a single bad player can let the other team score a goal and cause you to lose the game. In America we have two camps on the economy: the weak-link camp and the strong-link camp. I think VC is definitely a game that lends itself to the strong link camp. But I find myself a weak linker. The success of Facebook and Google do not matter much to the coal miner that lost their job in Kentucky.

    1. Michael Elling

      The best way to coach a soccer team of 15 girls is to focus on the weakest 3 and find the best positions that are suitable for them and the other girls can trust them in. Example, put the weakest player at the front and tell her to go after any ball that bounces off a defender or goalie. Guess what. They’ll invariably score or be in a better position to set up a score. If you tell them their role is to shoot and score, they’ll fail and so will the team. I have many examples of this in midfielder and defender roles as well.

  18. george

    In general, this view is accepted by our society, work culture and supported by the operating structures we’ve built into companies. However, defining value is more in the eyes of the beholder; perhaps value measures need to incorporate more than market cap, DAU and ARPU as a yardstick.A company like Tesla stands out to me, disrupting several industries (oil, auto, energy) and business models (buying experience – DTC selling, fuel stations). I tend to value more companies like this for their level of superior thinking, execution and contributions; very Apple like.

  19. Pete Griffiths

    Let’s pursue the analogy.VCs as steroids?

  20. sigmaalgebra

    Three medal winners are the only real successes? Let’s see:News Web SitesSure, supposedly the three biggies are NYT, WaPo, Yahoo!Well, then, we could include ABC, CBS, NBC, CNN, PBS, Salon, Huffpost, Fox.But at just sawTraffic Records in July – 192,000,000 Pageviews, 31,000,000 Unique VisitorsAt checked and saw:VISITS TO DRUDGE 8/06/16029,910,564 PAST 24 HOURS938,793,209 PAST 31 DAYS9,249,412,581 PAST YEAR Looks like the last two are relatively small organizations, but each seems to have a nice business going.And for the others, I’m not clearly seeing just three medal winners.Family FoodMcDonald’s, Burger King, Olive Garden, Pizza Hut, Domino’s, Little Caesars, Godfather’s, Papa Johns.Then there are lots of local pizza shops, Chinese carry-outs, and more.Lots of businesses doing well beyond just the top three.

  21. assafshomer

    That is a very narrow and bent point of view. Read some dhh… to get some perspective.

  22. ksm88

    great analogue

  23. Anny Smile

    Yeah, let’s show them what we can!

  24. Vendita Auto

    Re VC on Steroids: Just noted this via Dan Primack Term Sheet Had to smile:• Congratulations to Eric Martin, the funeral industry worker from Central Pennsylvania who won himself 100,000 shares of Jet stock a year ago in an unusual sign-up promotion. If anyone knows the exact share price for this deal, I’d love to do the math on what this guy walked away with.

  25. Michael Elling

    Winner takes all is not a sustainable model in a digital networked society. And the answer is not the decentralization you speak of.

  26. William Mougayar

    Love that, Charlie. Well said. I’m a big locavore first and foremost.

  27. Richard

    Fred is right when it comes to Internet services but less so when it comes to consumer products. Surprised, Fred didn’t start off with the conditional statement..if your product has a network effect…….(maybe fred is too deep into the network of highly engaged users meme?)

  28. LE

    Well said. (And poetic which shows how creative you are). I think this is true for analog products where the personal touch adds to a better experience. (Analog example might be a restaurant). For digital products (an example might be a hotel) I prefer non quirk tightly controlled dependable and predictable. (Same with a contractor and other cases where you want the exact end result that you bargained for).Edit: Ignore the “analog” v. “digital”. What I mean is some things I want to be precise but with certain things less precise actually adds to the experience.

  29. LE

    16 hour coffee. From my brother in law (just saw this on Facebook).A great gimmick and attention getter, regardless of the quality of the coffee….

  30. awaldstein

    Hey my friend.I applaud you and your success in your endeavor with all my heart.And no one believes in local and artisanal as much as myself as you know.But–need to say–that with very few exceptions–in the artisanal food business outside of owned premise-based sales, in order to be solvent you need to redefine local to be regional (at a minimum) and redefine artisanal to be industrial with a purity of cause and purity of ingredients.Overhead and margins demand breadth and breadth redefines what local means.

  31. PhilipSugar

    I wrote that this is definitely true for network effect companies but not others. Somehow I didn’t hit post but we are totally on the same page.

  32. Adam Sher

    This is probably because he’s focused on companies and products that benefit from network effects to the near exclusion of other types of investments. The disclosure is implicit in his view of companies / products.

  33. Adam Sher

    Certainly, what Chris Anderson describes in sufficiently dense urban areas, is happening online where networks can create urban density. Agreed about Meetup.

  34. Quantella Owens

    And if you do, I hope you’ll post it here. I’m really looking for someone to build a site where farmers can auction their surplus crops. That way smaller makers can buy them and turn them into products for sale at said farm stands. A farmer in MI dumped tons of tart cherries because they were surplus. What if instead he sold them to a smaller pie filling maker-I’ll create a brand-like Black Mamba Tart Cherry Pie Filling<tagline> “So Good It Might Just Kill You”-and they were able to use a co-packing facility and sell at a farm stand near them?

  35. LE

    find one that connects me to local organic farm standsWhat’s interesting to me in reading your comment is the mental masturbation (and I mean that in a positive way) that goes on in someone’s head simply in anticipation of a desirable activity. There is no doubt about the pleasure you would get from the simple act of trying to access these stands separate from anything you get once you actually get to the stand and buy the products. [1] This is like when I used to get excited trying to locate the hobby store and drive to the hobby store and browse the hobby store as opposed to actually flying the rc chopper that I bought at the hobby store.[1] And it’s infectious.

  36. Drew Meyers

    “But what’s really fascinating to me are the small specialty/affinity networks, like you might find on Meetup, or my favorite, Ravelry, which is a knitting community (I don’t knit) and self-funded last time I looked. To LE ‘s point, both Meetup and Ravelry allow people to connect online for largely offline activities. Uber, Airbnb do that too. Those types of apps are most interesting to me–use tech for real, in-person connections.”100% with you. If screen addiction the developed world suffers from spreads worldwide, I believe that’s a very dangerous world – very little empathy, lonely, soulless. Would love your thoughts on Horizon (airbnb/couchsurfing within trust networks), as the goal is to be the most efficient way to find a trusted person by location. We’re trying to counteract the “time suck economy” by getting you face to face with someone. I don’t think there is any question a world experienced face to face is exponentially better than a world experienced through your screen.

  37. awaldstein

    You are a smarter man than I then.The point is that the concept of local has evolved driven by the economics of distribution. That’s just math.In fact except for very very specific location, artisanal is a stronger term.And in actuality brand itself needs to capture and emote all of this.

  38. Kirsten Lambertsen

    I think was the setup in the “Breaking Bad” lab 🙂

  39. Adam Sher

    Most 3rd wave coffee shops I’ve been to make cold brew this way. It’s good, and if you drink coffee, you should have a cup. If a coffee shop makes cold brew via Kyoto and a typical (faster way), the Kyoto commands $0.75-$1.00 premium. The beans are typically better (house blend v single origin).

  40. James Ferguson @kWIQly

    Was in Ancona (Italy Adriatic) two weeks ago.Went into small (three seats) Pizzeria – Asked for a coffee to have with it seeing a machine in front of meAnswer – No we do make artisanal pizza – but our coffeee is cheap (and only for us to drink) – If you want Coffee you should go to the shop four doors down.But believe me the pizza was Gold !

  41. awaldstein

    Ex–I buy your Maple Syrup in a Bodega near my apartment. I love it. Not because it is local but because of the taste and we trust your brand.Local not artisanal yes, quality and organic yes. Social values are the local piece that I personally appreciate but doesn’t at least to me layer into the brand as we buy it in TriBeCa.Brands that speak directly and simply yet have a layered value are the strongest. I appreciate yours.

  42. awaldstein

    Local is an important ideal but this is a very nuanced topic.Ex–There is a restaurant outside Sienna–Ristorante Scuola di Cucina in Castelnuova–where everything is grown or made within a mile of it. Amazing, delicious and an exemplar more than a model. I love this place not as model as an ideal.Ex–In wine there are some that say that organic agriculture is non sustainable and environmental as with organic using natural sprays it takes more touches and likewise more fuel for the tractor to get the harvest in. Confuscated thinking (idiots actually) but unless you are clear on intent and understand the power of these nuances you miss the true connection of these handles.

  43. awaldstein

    We agree on most things at their core my friend.