I've started to solidify something in my head I'm christening The Words with Friends Theory. The basic idea is simple: in business, much like in life, all things eventually come full circle.
What I really mean by this has to do with the pressure investors put on companies to continually show earnings growth. Take a company like Amazon. Jeff Bezos started the company as a digital replacement for physical bookstores. Eventually, as we all know, Amazon transitioned into selling other goods, slowly evolving into the e-commerce juggernaut it is today. Now that it's a mature company, it is having to continually look for new ways to promote its brand and find additional revenue sources, and one of these initiatives in recent years has been the opening of brick-and-mortar Amazon bookstores, a physical replacement for digital bookstores like Amazon.com.
As the theory title suggests, you can also use Words with Friends as an example. Words with Friends took a consistently popular game format like Scrabble and brought it into the digital sphere so people from across the globe could play each other. As Words with Friends grew more popular, Zynga decided to try and milk every penny out of the franchise that it could, so it released a physical board game version of Words with Friends. You see where I’m going with this.
There are many more examples than this, but these are two that come to mind most easily. In both of these instances, I think the desire to keep showing Wall Street or private investors positive earnings growth led these companies to surrender their niches and continue seeking new revenue sources, even when that meant entering a market that the company was originally trying to obviate. Saying "all things eventually come full circle" might be a bit of an exaggeration, but this sideways pressure from investors looking to see continued expansion often does seem to push companies in directions that feel rather circular simply to squeeze out a few extra percentage points in profit.
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