Every big brand out there is afraid of you.
More so than you would think.
Even the biggest, most powerful, most seemingly unassailable titans are vulnerable. Google, Apple, Meta – they all can be beaten. Because they all afflicted with the same fatal flaw:
The growth trap.
The growth trap is why even the best businesses fall. And it’s why you have a chance. If it didn’t exist, I’m not sure you would. The big boys would in principle be able to keep on churning in their position forever.
But they don’t.
They die.
And they do so at their own hands.
The process of the growth trap is very simple, and it goes like this:
- Company X delivers huge value to the market, and grows rapidly.
- At a certain point however, company X reaches its “natural size”, and growth slows.
- However by this point company X has shareholders who expect continued growth (a problem).
- So company X starts to “force” this growth by exploiting and mistreating its customers in some way.
- This exploitation then opens up the potential for someone to come along and replace company X.
We can see many examples of the growth trap in action. Meta have been eroding the quality of their products for years in an effort to squeeze ever more value from a static number of users. Google’s search continues to perform worse by the day, broadly for the same reason.
One of the most blatant examples of this can be seen in the skyrocketing price of streaming services like Netflix and Disney+, as per this graph.
They do this because they can’t keep piling on subscribers indefinitely, so hiking the price and counting on customers not to notice is their best bet for continued growth.
(I took that chart from a Ted Gioia piece about the streaming price-hike, something he calls an “Endgame Strategy”, since it is something a business does as it approaches the end of its natural growth and starts trying to milk its customers)
The irony here is that all of these companies could maintain their positions indefinitely, IF they were content with stable profitability rather than growth. In that scenario they could simply continue serving their customers better and better, and hold steady.
But that’s not how the game is played.
Which is sad for them. And sad for the customers. But it’s great for you.
Because you see, the big players will always be suicidal. They will always reach too far. They will always grow themselves into oblivion. And then it will be your turn. You who responds to that overreach, and fills the satisfaction gap that they have created.
So keep your eyes open. Because everywhere you see the growth trap biting – everywhere a big company is starting to milk, rather than serve, its customers – there is an opportunity.
Go get it.
