RE: Godzillas
I would like to share a post that Geoff Moore wrote concerning Godzillas.
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Subject: Gorila versus Godzilla
From: "Geoffrey Moore"
Date: Sun, 20 Feb 2000 19:05:17 -0800
Gang,
Well, the galleys for the new book are in, so I am rejoining the human race and the readership of gglist. I noticed in a recent posting regarding AOL/Time Warner that the poster did not see it as a gorilla. This is absolutely correct. Gorillas, by definition, are product-owning companies that can profliferate proprietary architectural control through securing adoption of their products. Internet sevices companies--which is basically all the interesting Internet companies, I think--are by definition excluded. That is why we had to release a revised edition to the book with the Internet chapter retitled the Godzilla Game.
What I have not seen on the list is a good discussion about the nature, care, and feeding of godzillas. This is much needed. Our chapter was a nod in what I think is the right direction, but the ideas need real-world criticism and fleshing out. Here are some things to noodle on. Godzillas do participate in increasing returns markets. This separates
Internet services into two distinct camps. Compare an outsourcing play like Corio with an exchange play like eBay. It is not clear that Corio becomes more valuable to either suppliers or customers as it gets bigger. By contrast, it is clear that eBay does. So I would argue that eBay is in an increasing returns market and is a godzilla, gaining returns similar to a gorilla, while Corio is not and can never be, and thus will have returns more like a king. Godzillas most unnerving characteristic is their apparent lack of any barriers to entry. Thus eBay gets attacked by a consortium of Microsoft, Dell, Lycos, etc. And then Amazon enters the fray as well. There is no proprietary architectural control point from which to fight these interlopers off.
Nonetheless, I think there may be a "voluntary" property of customer loyalty--probably simjply brand loyalty, although I think we have to be very careful with the word brand on the Internet until we get some sense of how i-brands are the same and different from historical brands--that may be powerful enough in its own right. There is an article on internet-commerce strategy in the November/December Harvard Business Reivew called "Getting Real About Virtual Commerce" that
identifies four categories of e-commerce players competing on three axes of competitive differentiation, that makes for very interesting reading. The four categories are three that are familiar -- product suppliers (Sony), brick and mortar retailers (Walmart), and e-retailers (Amazon)-- plus an
important fourth, navigators (Yahoo) -- all competing on Reach (how many potential buyers, sellers, and product offers can they connect), Affiliation (whose interests does the site end up sponsoring--with consumer affiliation being the bet as the key one), and Rich Information (both on the catalog
side and the buyer profile side). It makes for some good analytics. The big weakness in the article, from my point of view, is that I think the Internet is going to commoditize the resale or products such that no one makes a ton of money from it, but that at the same time it will create a radically more efficient market for services, which will be highly profitable for a long time to come.
Anyway, just some thoughts from the ether,
Cheers,
Geoff
Geoffrey Moore
Chairman, The Chasm Group
Venture Partner, Mohr Davidow Ventures
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