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In September, 2014, after investing in a ride-sharing company called Sidecar, Richard Branson declared that it was “early days and, like a lot of other commodity businesses, there is room for innovators on great customer experiences.” He added that he was not putting his money into a “winner-takes-all market.” Lots of ride-sharing companies, he was arguing, would survive and thrive. Yesterday, though, a mere fifteen months later, Sidecar’s co-founder and chief executive, Sunil Paul, announced that the company is turning off its ignition.

As someone who has felt, first-hand, the agony of shuttering the doors of his startup, I feel Paul’s pain. But I want to focus on what Branson, a self-made billionaire, who is more often right than wrong, said about ride-sharing not being a “winner-takes-all” market. What Branson says is generally true for companies that sell analog products, such as packaged goods or soda, or analog services, such as air travel. Coke isn’t going to drive Pepsi out of business, and Toyota isn’t going to eliminate Honda. But in today’s Internet-always-on world, that maxim increasingly doesn’t hold true. Most competition in Silicon Valley now heads toward there being one monopolistic winner. And that is why it is hard not to see that, right now, the only competition that matters in ride-sharing is between the two largest companies: Uber and Lyft.

In the course of nearly two decades of closely following (and writing about) Silicon Valley, I have seen products and markets go through three distinct phases. The first is when there is a new idea, product, service, or technology dreamed up by a clever person or group of people. For a brief while, that idea becomes popular, which leads to the emergence of dozens of imitators, funded in part by the venture community. Most of these companies die. When the dust settles, there are one or two or three players left standing. Rarely do you end up with true competition.

In 1998, when Google was born, search was a competitive market with one clear leader, Yahoo, which had identified the need for a Web directory. Others, such as Infoseek, Lycos, and Excite, were falling behind. So the only way to beat Yahoo’s old, directory-style search was to do something different. That’s exactly what the Google co-founders, Larry Page and Sergey Brin, did. They correctly identified that the Web was going to grow exponentially, in size, scope, and usage. It would need a new, faster, simpler search engine that would update as quickly as the Web itself. And they would make it super fast—the faster you received results when you typed in a query, the more likely you were to search again. It was a perfect behavior for a world that was going slowly from dial-up Internet to always-on broadband connections. Of course, to make this happen, they would need to build and own their own infrastructure, from networks to data centers to servers.

As Google started to grow, its new, more algorithmic approach to search attracted new competitors—Simpli, Dogpile, Northern Light, and Direct Hit are some of the doomed companies that came out around that time. Another was a company called Powerset, which ended up getting acquired by Microsoft and eventually became a core part of what is now Microsoft Bing, which currently runs a distant second in the search-engine sweepstakes.

Looking back, Google’s success came from the fortuitous timing of being born at the cusp of the broadband age. But it also came about because of the new reality of the Internet: a lot of services were going to be algorithmic, and owning your own infrastructure would be a key advantage. The infrastructure—networks, storage, and computers—allowed Google to crawl the Web and rank the results cheaply. As Google got more money, it built better infrastructure, which allowed the company to serve up results more and more quickly, in the process training hundreds of millions of people to use Google whenever they wanted to search. The more people searched, the more data they gave Google to make its index better, smarter, faster, and, eventually, more personal. In short: as Google got bigger, it got better, which made it bigger still. Google is a winner that has taken it all.

This loop of algorithms, infrastructure, and data is potent. Add what are called network effects to the mix, and you start to see virtual monopolies emerge almost overnight. A network effect occurs when the value of a product or service goes up with the number of people using it. The Ethernet inventor Bob Metcalfe called it Metcalfe’s Law. Telephone services, eBay, and Skype are good examples of the network effects at work. The more people who are on Skype, the more people you can call, and thus the more likely it is that someone will join.

While in the early days of networks, growth was limited by slowness and cost at numerous points—expensive telephone connections, computers that crashed, browsers that didn’t work—the rise of the smartphone has essentially changed all that. Facebook, which historically was one of the main beneficiaries of network effects (a social network becomes more valuable to you as more of your friends join it) has grown from two hundred million users to 1.2 billion in the past seven years, as phones have become the primary devices we

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