Interesting post by Geoff Moore on the GG email list:
"Gang,
Some more thoughts on this topic from the venture front, stimulated by Ali's
recent post. The interesting idea here, as I have said before, is B2B
exchanges where an entire marketplace can either be initiated or
reengineered using the Internet, thereby permanently shifting wealth to one
or more new companies. In my view these plays fall into two camps --
increasing returns markets where a single company will come out the
godzilla, and forever fragmented markets where there will be a market leader
but plenty of followers. I think these two patterns are directly analogous
to gorilla and king games respectively. The valuations in the public
markets, I think, do not properly discriminate between the two cases,
overvaluing the king games, undervaluing the godzilla games (now there's a
first -- saying that Internet stocks are undervalued!). The value in the
godzilla game, of course, goes only to the godzilla, so you have to figure
in a risk discount for your company not gaining that status. But I think we
can play godzilla games using the same buy the basket approach and
consolidating in the godzilla as soon as it emerges. The search engine game
ending in Yahoo would have tracked to this pattern well I think. The games
to stay away from in my view are the king-ish games -- don't have a name for
them (shame on me!) -- like the pet food play, or anything where the market
will actually want additional competitors going forward.
Geoff"
I'm curious what the thoughts are re: king games such as JDSU or CREE? Will the market want additional competitors going forward, and is that a reason to stay away? (I am very tempted to invest in these company right in the middle of my vow to consolidate what I have and stop buying new companies! Give me a reason to stay away!<g>)
JB |
