The Internet makes it easy for the big to get bigger, and makes it hard for the small to establish any foothold at all. Establishing a global presence on the Internet costs hundreds of millions, if not billions, of dollars. Once upon a time, an entrepreneur might start a business in the local neighbourhood with a few thousand dollars, and over a period of many years, and much effort, the small town operator might become a national operator. If only life were as simple now. The problem with the Internet is that the big players are available to customers everywhere, and the small guy has to compete on equal terms with large multi-national operators.
Network effects ensure that the big get much bigger, and the small stay small or disappear.
There will soon be no such thing as a local retailer. The Internet has weighted the game very heavily in favour of the big operators, although this in no way implies that the giants of today will be the giants of tomorrow. The large Internet-based operators of tomorrow will dwarf the large corporations of today, and we are seeing a dividing of the wheat from the chaff where imaginative exploitation of the Internet is concerned. Where the big players fail to respond to an Internet opportunity, then we shall see the small upstarts building a venture that may survive more than the next two years. There is another more disturbing myth that was created by the Internet, and this concerns the notion that anyone with a good business proposition might be able to find venture capital.