mocoNews has an excerpt from Sandell Asset Management’s proxy statement regarding Infospace. It includes a lesson that all startups should learn:
Once InfoSpace had invested the capital, proved the market opportunity and helped carriers achieve scale, the decision to go direct for the carriers was inevitable and should have been foreseen by management.
The lesson is not really limited to startups, but worthy of product managers, too. When planning out a business, you need to think about how the attitudes of your customers will change as you become more successful. I seem to recall an HBR article some years back that talked about the optimal market share being around 40%. Once your market share rises above 40%, your customers start looking for alternative suppliers or substitutes. I experienced this first hand at Openwave several years ago and find it interesting that Nokia has set that as their target.
