Internet business managers need a framework that can help them think about where their company should head and how it should get there. Investors should take note also, so that they understand where their investments are headed. The Web Business Pyramid, depicted in Figure 1.2, is such a framework. The pyramid shape implies a process of aspiration and attrition. Most Web businesses start out at the bottom of the pyramid.
Few survivors make it to the top.
Lossware refers to Web businesses that are destined to lose money. Customers have no switching costs, meaning that it is easy for them to take their business elsewhere. Vendors spend virtually all their money in what seems like an unending loop of marketing and other expenses. The result of the spending is most often competitive parity, not competitive advantage. Many firms do not survive this level.