Been looking at the start up scene for quite a minute. One thing that comes up quite clear is that startups that make a huge impact either do something revolutionary that creates a new way of doing (new) things or ears into the status quo.
For the latter, this could range from doing things easier than they were being done previously by existing players or plain undercutting, or both. Mostly undercutting. New players undercut when they have the advantage of user acquisition. User acquisition is everything.
If you take a random 5 players in the tech scene, Amazon is known to pull something like that for publishers, Apple was accused of the same. Locally, I’ve heard whispers about a prominent e-commerce site doing just that to the suppliers.
“We will take your stock, we can push numbers, but this is the price we will buy your stuff from you, doesn’t matter if there’s a margin, take or leave.”
Many players end up taking since they don’t have distribution and sales channel set up, they need to push numbers so they have a chance at being seen as a seller. Catch 22.