Korva is a scroll of the internet’s best ideas.
Monopolies need a tenfold edge
The tenfold rule
Amazon had over ten times as many books, sold efficiently online. PayPal moved money on eBay more than ten times faster than the alternative, since checks took seven to 10 days to clear. The iPhone was the first smartphone that worked, which is an order of magnitude or more of improvement.
Traits that make it last
Three more traits help a monopoly last. Network effects build a monopoly over time, though they are hard to start: it is not obvious why a network is valuable to the first person using it. Economies of scale come with very high fixed costs and very low marginal costs, and software takes this furthest because its marginal cost is zero, so a product that works significantly better than the existing solution can grow fast enough to keep pace with a growing market. Branding is an idea lodged in people's heads that creates real value.
Google as the example
Google shows all four. PageRank gave it a technology an order of magnitude better than other search engines, the ad network gives it network effects, storing all those sites gives it economies of scale, and by now it has a brand. The proprietary technology is probably the weakest of the four today, which puts Google at about three and a half out of four.
Why are network effects so hard to start?
A network is only useful when others are on it, so the first user gets almost nothing. Robert Metcalfe, a co-inventor of Ethernet, proposed that a network's value grows roughly with the square of its users. By that logic the early stretch is the flattest part of the curve. The first fax machine sold had no one to send a fax to.
How did PageRank rank web pages?
Larry Page and Sergey Brin described PageRank in a 1998 paper written at Stanford. It treated each link to a page as a vote for that page, and counted votes from important pages more heavily. Earlier engines mostly ranked by the words on the page itself. The paper was titled The Anatomy of a Large-Scale Hypertextual Web Search Engine.
Why was the iPhone such a leap?
Before 2007, popular smartphones such as the BlackBerry and the Palm Treo relied on physical keyboards or styluses. The iPhone launched in June 2007 with a multi-touch screen and a full web browser. Apps arrived a year later with the App Store, opened in July 2008.
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