How to be the best no. 4, 5 or 6 you can possibly be
Magazine Contributor
2 min read

This story appears in the April 2002 issue of Entrepreneur. Subscribe »

Nike, Adidas and Reebok. American, United and Delta. McDonald's, Burger King and Wendy's. In scores of industries from footwear to fast food, Jagdish Sheth and Rajendra Sisodia found the three strongest, most efficient companies usually controlled 70 to 90 percent of the market. That's significant for entrepreneurs, Sheth and Sisodia say in The Rule of Three (Free Press, $27.50), because if you're not one of the Big Three in your field, you have two choices: Become a niche player, prospering in a small but profitable corner of the market, or become an in-betweener who conducts a perilous existence in what they call "the ditch."

According to the authors, entrepreneurs--especially those in maturing markets--must specialize in markets and products, target narrow demographics and otherwise fill particular niches if they hope to coexist with the dominant competitors. Companies in the ditch, they say, almost inevitably have to compete on price with the better-equipped rivals. Without the efficiencies of giants or the higher margins of specialists, most ditch-dwellers fail or are acquired.

Sheth and Sisodia also show how the third-largest competitor in a market usually is hurt most by new competition, burdensome regulation or other changes. Overall, they make it plain that entrepreneurs who envision becoming dominant in their fields had better think long and hard before leaving the niche for the ditch.

Feeling Lucky?

As a venture capitalist, Peter Kash helped raise more than $500 million and start more than a dozen firms. In Make Your Own Luck (Prentice Hall Press, $23), he reveals that it was more luck than smarts. He tells about capitalizing on chances to connect with Arnold Schwarzenegger, Margaret Thatcher, Brooke Shields and others, and how you can cultivate the same types of connections. His advice ranges from attending all the trade shows and conferences you can to never letting a caller who has a wrong number go without finding out who it is. Make Your Own Luck takes a new approach to networking that many entrepreneurs will find inspiring and useful.

Austin, Texas, writer Mark Henricks has covered business and technology for leading publications since 1981.


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