Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.


 
Wednesday, May 19, 2004


Value Chain, who's been writing some pretty cool stuff, responded to my Yahoo vs Google argument - my response back:

AdSense is (as you rightly notice) a risk-allocation mechanism - and a damned good one. But for any third party risk-allocation mechanism to really work, the third party has to be trustworthy, because they're acting as the agent for both the risk-taking and the risk-making principals.

My intuition is that Overture simply does not have the trust to be credible with risk-takers - users (please note I mean those who buy, or 'take on' risk, as opposed to like skydiving style 'risk-taking'). I'm sure that corporates will buy into it - but given the flap over GMail and privacy, and given that Google is a massively more trusted brand (apart from the SEO industry and the conspiracy theorists) than Yahoo or Overture, I'd guess that they'd face a lot more potential criticism than Google has. This means that if you're an existing Yahoo user, switching costs just dropped; and if you're a potential Yahoo user, potential benefits just dropped significantly.

Even if they can build trust, they leave themselves hugely vulnerable to offensives from any number of potential rivals while they do so - so the opportunity cost is high as well.

Interesting stuff to think about!

-- umair // 12:06 AM // 0 comments


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