37signals responds to Wired article | Hacker News Reader

37signals responds to Wired article

37signals.com

9 pointsmqt7 comments

> Second of all, we’re not in the winner-take-all software world of the 90’s anymore.

I'd say they're wrong. The laws of economics don't change. Winner take all markets with big positive network externalities are the same whether it's now, 100 years ago, or a 100 years from now.

However, I think they have picked niches where there are network effects, but not huge, crushing ones, so they're not going to see that.

Would have to disagree with you there. Network effects are more valid in systems where value is increased by every additional connection (user or service) in 37 signals case, the network effects are not that much inherent to their product.

I think this is a conscious choice on their part. Just like there are many other "niches" in the long tail that can be served without hazard from network effects.

You're right that fundamentally their products aren't affected that much by network effects. That doesn't mean that "everything has changed" though, which was my point.

>> Second of all, we’re not in the winner-take-all software world of the 90’s anymore

I'd say they're right. The web is expanding markets. The remaining fraction of the market after the giants have had their lion's share is still larger in the 'web' world - perhaps not in percentage terms but in absolute dollar terms. Which is what matters.

What fundamental laws of economics have changed? ebay is still ebay and is still a winner take all market, just to cite one example.

I'm not going to say that technology hasn't changed anything - it's doubtless opened some things up. But where there are big network effects, it is still going to lead to a dominant player in a given market. Where there aren't, there is room for more competition. That's always going to be true, whatever technology you're talking about.

It's not just me saying this folks:

“Ignore basic economic principles at your own risk. Technology changes. Economic laws do not.” -- Hal Varian (who is now Google's Chief Economist)

http://www.squeezedbooks.com/book/show/7/information-rules-a...

Side question: I used to really look forward to each issue of Wired. It struck me as clever, attractive, provoking.

Then it turned into a glossy catalog of pricey cars and cognacs, with articles tossed in to fill some space.

I haven't really looked at an issue in a while. Is it worth the cover price?

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