Typically, when new or potentially disruptive innovations come along, they are pursued by a large number of small players.

That’s because new innovations are characterized by uncertainty and high risk, making them unattractive to large incumbents.

Furthermore, as the late HBS professor and author of The Innovator’s Dilemma, Clayton Christensen, put it, disruptive innovations are commercialized in small markets, offer small margins, and result in products that simply aren’t very good or ready for the mainstream yet.

For example, people could game early search engine results simply by including a search term in black font on a black background hundreds of times over — even on completely unrelated sites. An innocent search for ‘cars’ could reveal porn site results because a webmaster had deployed the above-mentioned tactics.

Fortunately, we’ve come a long way since.

Today, Google is a far more sophisticated search engine and has become the go-to for over 70% of internet users, a verb (“Google it!”), and a US$1.17 trillion company (18 Jan 2021). Microsoft’s Bing and China’s Baidu, in contrast, commands little more than 10% each of the market.

Step 1: Fragmented Market

In the wild west days of the internet — the 1990s — a large number of small players shared the market for search.

This included the likes of Aliweb, Infoseek (acquired by Disney), Yahoo! Search, Lycos, Ask Jeeves (now Ask.com), Excite (acquired by Ask.com ), Webcrawler (acquired by Excite), Altavista (acquired by Yahoo!), MSN Search, Overture, and AllTheWeb (acquired by Overture) ….to name just a few.

Search engine users at the time would constitute what late sociologist Everett Rogers called innovators and early adopters, as exemplified in his technology adoption curve, below. In fact, when Google was founded, in 1998, there were only 147 million internet users (3.6% of the world population), compared with over 5 billion (64%) today.

Given that disruptive innovations aren’t all that good initially, it makes sense that a small market of early adopters — who derive some benefit from said products and have some peculiar need satisfied — jump on board first (think the early crazies who used Airbnb in the mid-noughties).

Step 2: Emergence of Winners

It took about 15 years for Google to assert its dominance in the search market, from its humble beginnings as BackRub — the name of its early search engine.

But it was a combination of both internal innovation and the acquisition of smaller players such as Outride (2001), Kaltix (2003), and Orion (2006) that led to Google’s dominance in the search market.

Once innovations cross the chasm from early adopters into the early majority, we witness to see the emergence of winners, as well as a little phenomenon known as the 80/20 or the Pareto Principle. The principle suggests that 80% of the spoils will go to 20% of the companies, and Search is not immune.

Winning companies tap into the compounding benefits of scale and critical mass market capture — revenue, brand, product quality — and with that, the cost to enter a more mature market and truly compete increases by orders of magnitude. It makes it almost impossible for smaller players to enter — just try building a search engine that can truly compete with Google’s today.