The Importance of Compliments to Make Your Company Grow

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PayPal started as an eBay service and has now being used across all these other platforms. That's the power of compliment. You get to shift profit pools back and forth, essentially responding to competitive pressures. As long as you're way ahead in hardware, you make all your money on Hardware. When that's a little less obvious, you start making money on services.

In an era driven by network effects, smaller players struggle to compete against bigger platforms. The trick to gaining ground on a much larger rival, says Harvard Business School professor Felix Oberholzer-Gee, is choosing a strategy that can’t easily be imitated. A good example is TaoBao’s strategy for displacing eBay in China, back in 2007.