Rise of Web-Scale Companies

Let us continue to explore the trends that led to the formation of massive companies based on the disaggregation of services from the telecom operators.

With the “Internet” being the new platform for services; the growing popularity of the Internet then fuelled a rapid growth of these services.

What is the reach of a brick and mortar store? Few square km at best? How many people? In Tokyo, 25 square km mean about 150,000 people. No one may want to travel more than 5 km to reach a store, they would rather visit another brand that is nearer. If a company has to cover whole Tokyo, imagine, how many stores will be required?  How many people will they need to train? What if they go wrong about demand in one area? What if they go wrong in selecting the location? How much money will they have to lock-in in terms of the inventory on display, stocks etc?

Can you imagine any company getting the story right within a few years? It may take them 20+ years to reach countrywide and then global presence.

But look at this graph for Google, Amazon, Facebook. They grew at a scale that defies all logic. I call this scale “web-scale” because this scale is possible only because of the marketplace called worldwide-web. Next week, we will explore that factors that favored the web-scale companies and also some things that they did differently. So stay tuned.