Source: Google image.
Starting a business strategically and scaling-up to the highest level is a dream of most of the entrepreneur of today but unfortunately, it's not a cup of tea of every entrepreneur.
Most often entrepreneurs fall into ambition and passion trap which lead them to be a desperate and pushy entrepreneur category. Strategically, to be a monopolist entrepreneur you need have passions.
Lets see take example of a Monopolist Entrepreneur: Jeff Bezos
With Amazon, JB shows how it can be done. Jeff Bezos’s founding vision was to dominate all of online retail, but he very deliberately started with books.
There were millions of books to catalog, but they all had roughly the same shape, they were easy to ship, and some of the most rarely sold books—those least profitable for any retail store to keep in stock—also drew the most enthusiastic customers.
Amazon became the dominant solution for anyone located far from a bookstore or seeking something unusual.
Amazon then had two options: expand the number of people who read books, or expand to adjacent markets. They chose the latter, starting with the most similar markets: CDs, videos, and software.
Amazon continued to add categories gradually until it had become the world’s general store. The name itself brilliantly encapsulated the company’s scaling strategy.
The biodiversity of the Amazon rainforest reflected Amazon’s first goal of cataloging every
book in the world, and now it stands for every kind of thing in the world, period.
Message is clear: Focus on your niche and dominate it, once you create and dominate a niche market, then you should gradually expand into related and slightly broader markets.
Now lets take example of another Monopolist Entrepreneur: Pierre Omidyar
eBay also started by dominating small niche markets. When it launched its auction marketplace in
1995, it didn’t need the whole world to adopt it at once; the product worked well for intense interest
groups, like Beanie Baby obsessives.
Once it monopolized the Beanie Baby trade, eBay didn’t jump straight to listing sports cars or industrial surplus: it continued to cater to small-time hobbyists until it became the most reliable marketplace for people trading online no matter what the item.
Sometimes there are hidden obstacles to scaling—a lesson that eBay has learned in recent years.
Like all marketplaces, the auction marketplace lent itself to natural monopoly because buyers go
where the sellers are and vice versa.
But eBay found that the auction model works best for individually distinctive products like coins and stamps.
It works less well for commodity products: people don’t want to bid on pencils or Kleenex, so it’s more convenient just to buy them from Amazon.
eBay is still a valuable monopoly; it’s just smaller than people in 2004 expected it to be. Sequencing markets correctly are underrated, and it takes discipline to expand gradually.
The most successful companies make the core progression—to first dominate a specific niche and then scale to adjacent markets—a part of their founding narrative.
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