Hamilton Helmer: uncertainty

Transcript context

…The last thing we're going to talk about after this is going to be my favorite. Switching cost. I thought this was super interesting because people think about switching cost as (I think) tend to be like old school industries or whatnot. But I realized, there's a huge amount of switching cost power in a lot of technology companies, too. Take Slack, for instance. Slack has network effects, but also switching cost. We run on Slack. If we were to switch, that would be a huge cost to our organization. How did you start thinking about that? Have other people in tech, since you published this realized like, oh, this might be more a source of power I'm not thinking about? I don't know. I think people had thought about it. There are a lot of subtleties around switching cost that you have to think through. One is that, in general, it creates a win-lose situation with your customer. There's sort of a management problem in that. Another is that there's a competitive dynamic which is if you have something that's attractive and a high switching cost, the competition will try like crazy to create something that mitigates the switching cost. You'll see a lesser app have a translator device. Often the imperfection of those, you look at EDA (electronic design, automation tools), there are libraries that are associated with those, but if you move from one tool company to another, the translation never works very well. Or every CRM system is like, oh, you export your data out of Salesforce. We'll do it for you.…

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