{"id":459,"date":"2011-11-06T21:27:11","date_gmt":"2011-11-07T01:27:11","guid":{"rendered":"http:\/\/blog.payne.org\/?p=459"},"modified":"2011-11-06T21:27:11","modified_gmt":"2011-11-07T01:27:11","slug":"the-gaaf-ecosystem","status":"publish","type":"post","link":"https:\/\/payne.org\/blog\/the-gaaf-ecosystem\/","title":{"rendered":"The GAAF Ecosystem"},"content":{"rendered":"<p>When we started <a href=\"http:\/\/en.wikipedia.org\/wiki\/OpenMarket\">Open Market<\/a> in 1994, the Internet was pretty much the Wild West. Everyone was figuring out what it &#8220;meant&#8221;, and it was a time when a 2-person company could have the on-line presence of IBM (and often did).<\/p>\n<p>Now, fast-forward 15 years. \u00a0We have an Internet ecosystem dominated by the &#8220;Gang of Four&#8221;: \u00a0<span style=\"text-decoration: underline;\">G<\/span>oogle, <span style=\"text-decoration: underline;\">A<\/span>pple, <span style=\"text-decoration: underline;\">A<\/span>mazon, and <span style=\"text-decoration: underline;\">F<\/span>acebook. \u00a0Combined, these &#8220;gorilla&#8221; companies have a <strong>$750 billion<\/strong> market cap, employ over 100,000 people, and extract most Internet revenues and profits. \u00a0And increasingly, this group is controlling the devices we use to get on-line.<\/p>\n<p>It&#8217;s not the Wild West anymore, and the new &#8220;GAAF&#8221; ecosystem has added new constraints around building Internet companies:<\/p>\n<ul>\n<li><strong>There&#8217;s a tax.<\/strong> \u00a0It&#8217;s overt (e.g. 30%) or indirect (e.g. ad dollars, hosting fees, API fees, etc)<\/li>\n<\/ul>\n<ul>\n<li><strong>There&#8217;s the threat of copying.<\/strong> \u00a0The gorillas use the ecosystem to source new features and products. \u00a0See what Apple <a href=\"http:\/\/blog.payne.org\/2011\/10\/12\/ios-5-apple-taking-over-the-world\/\">copied into iOS 5<\/a>.<\/li>\n<li><strong>There&#8217;s an upper-bound on success. \u00a0<\/strong>\u00a0If you get too big, the gorillas change the rules (e.g. Facebook with Zynga).<\/li>\n<\/ul>\n<div><span style=\"font-size: small;\"><span class=\"Apple-style-span\" style=\"line-height: 24px;\">The last constraint, in particular, has really strained venture capital investments. \u00a0 Venture capital depends on large exits for generating returns. \u00a0If you take out those home runs (or bound them), the returns aren&#8217;t so great.<\/span><\/span><\/div>\n<div><span style=\"font-size: small;\"><span class=\"Apple-style-span\" style=\"line-height: 24px;\">I still think there are good opportunities within the GAAF ecosystem, but I think they&#8217;re limited. \u00a0If you&#8217;re hunting &#8220;big disruption&#8221;, <a href=\"http:\/\/blog.payne.org\/2011\/09\/21\/408\/\">look elsewhere<\/a>.<\/span><\/span><\/div>\n","protected":false},"excerpt":{"rendered":"<p>When we started Open Market in 1994, the Internet was pretty much the Wild West. Everyone was figuring out what it &#8220;meant&#8221;, and it was a time when a 2-person company could have the on-line presence of IBM (and often &hellip; <a href=\"https:\/\/payne.org\/blog\/the-gaaf-ecosystem\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-459","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/comments?post=459"}],"version-history":[{"count":0,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/459\/revisions"}],"wp:attachment":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/media?parent=459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/categories?post=459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/tags?post=459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}