Thread by @paraschopra

Market leaders get killed by non-competitors.

🧵

1/ As an entrepreneur, you worry about customers all the time.

Focusing on customers is obviously important but customers will never ask you to introduce switching costs, which are precisely what you should do in order to continue making profits.

invertedpassion.com/switching-cost…

2/ But once you’ve been able to build a defensible business by building a big moat, you can pat yourself on the back.

Your business now won’t get killed by competitors.

invertedpassion.com/use-all-your-u…

3/ You've successfully thwarted risks from direct competition but your business is now likely to get killed as collateral damage to something else where you weren’t even a player.

4/ Windows had an absolute monopoly on personal computing and that’s why Linux or MacOS didn’t impact its growth

What weakened its grip, however, was the shift of computing from the desktop to mobile that accessed services running on cloud (none of which were running on Windows)

5/ To prevent yourself from getting caught off guard, keep an eye on your customers who are switching to products that you never even considered as a competition.

6/ You may have laughed at these non-competitors as toys, but before you know it, all your customers are using them.

Be in the desires business, not the solutions business.

invertedpassion.com/jobs-to-be-don…

7/ Underestimation of new trends is basic human nature.

Often the biggest competition comes from people who compete on a completely different vector than you.

8/ • If you want to make money, they want to make an impact (think Google entering your market and offering products for free, subsidized by its main search business).

9/ If you want to make an impact, they want to become famous (think raising ever larger rounds and expanding aggressively, even when it’s unprofitable to do so).

10/ If you want to become famous, they want to just have fun (think Satoshi Nakamoto disrupting banking by open-sourcing bitcoin).

11/ Remember 🧠

if you sell the best radios in town, your customers will likely switch to Spotify and not other radios.

12/ That's it!

I'm posting ~1 new mental model for entrepreneurs every week.

Here's the entire list of 60+ mental models that I'll cover in a year or so: invertedpassion.com/free-book-ment…

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