Korva is a scroll of the internet’s best ideas.
Best curve ever, still lost
Network effects and standards
Competitive advantages in the digital world can be as powerful as offline ones, if not more. Network effects built LinkedIn, Facebook, and Alibaba. An industry standard can hold a market in a chokehold: Oracle had the database administrators and all the software tuned to work with it, so it dominated the relational database market for ages despite free and open-source rivals.
Scale, platforms, and patents
Scale can arrive fast on these curves. Amazon got a Walmart-size scale advantage in five years where Walmart took 40. A platform that others build on is an advantage, and so is critical intellectual property. Qualcomm had it because you couldn't make a phone without paying them, and ASML has it because you can't make a chip without their lithography.
Brand
Brand is another. Google and Amazon never had to advertise, and Elon Musk's companies never have either. Almost all of these companies have the advantages rolled into one, and Apple has all of them.
How do network effects make products stickier?
Each new user raises the value of the product for everyone already on it, so a rival network starts out behind even if it is cheaper. Robert Metcalfe, who co-invented Ethernet, argued that a network's value grows roughly with the square of its users. Economists treat that as a rough rule, not an exact one. Metcalfe made the argument in the 1980s while selling networking equipment.
Why did Oracle hold the database market?
Edgar Codd of IBM published the relational model in 1970, and Oracle shipped the first commercial relational database built on it in 1979. Administrators trained on Oracle's tools, and companies wrote their applications against it, so switching meant rewriting software and retraining staff. Free rivals such as MySQL, released in 1995, and PostgreSQL, released in 1996, still did not displace it quickly.
Why can't advanced chips be made without ASML?
ASML is the only company that sells extreme ultraviolet lithography machines, which print the finest patterns on the most advanced chips. The machines make their light by firing a laser at tiny tin droplets about 50,000 times per second. Development took roughly two decades before chipmakers used the machines in volume production around 2019.
Why does Qualcomm collect on most phones?
Qualcomm holds patents on CDMA, a radio technology that became essential to 3G cellular standards. Phone makers could not build a compliant 3G phone without licensing them. Qualcomm charges those licensing fees separately from the chips it sells. The company's licensing arm has been one of its main profit sources since the 1990s.
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