The Power Progression
Match the power you pursue to the phase your market is actually in
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 6
- Confidence
- 88%
Helmer observed that the path to persistent returns is not linear: there is a step change, a period during which power can be established, and then a window that closes. During the takeoff phase there are more customers than product, nobody knows the right model, technologies shift constantly and multiple competitors look viable. That flux is what makes pivoting possible, and it is why the founder and their team, not an outside strategist, must make the strategic calls: the information is changing too fast for anyone else to process. Switching costs sit in the takeoff phase specifically because that is when the true customer economics are not yet reflected in acquisition prices. Network economies, scale economies and switching costs are the most common middle-phase powers in technology, and all three reward relative size, which is why being several years behind a similar-vintage competitor is dangerous once the market settles.
Origin
Extracted from Acquired, where Helmer explains how decades of consulting showed him that persistence arrives as a step change and that the strategist's job is teaching founders to fish rather than delivering recommendations.
Core principles
- 01Establishing power is a step change, not a gradual accumulation
- 02The window for establishing power opens and then closes
- 03Different powers can only be established in different market phases
- 04During takeoff, flux gives founders degrees of freedom that mature companies do not have
- 05Only the founding team can process the information fast enough during takeoff
- 06Scale, network and switching-cost powers are middle-phase and reward relative size
How to run it
- 1
Diagnose the phase
Ask whether the market is still originating, in takeoff with more customers than product, or settling into stability. Signals include the number of viable competitors and whether anyone has converged on a model.
Pro tip A market where dozens of players are all growing and profitable is almost always pre-shakeout.
Watch out Rising-tide growth feels like validation and tells you nothing about who survives.
- 2
List which powers are still available
Map the phase to the powers that can still be established. Some barriers can only be built while the market is in flux; others require the scale that only arrives later.
- 3
Spend the flux on barriers, not just growth
During takeoff the degrees of freedom are at their maximum: you can still pivot, reprice and restructure. Use that freedom to establish a barrier while it is still cheap to do so.
Pro tip Ask Intel to pivot and it will not happen easily; the ability to move is itself a wasting asset.
- 4
Check whether the economics are already priced in
For switching-cost strategies specifically, verify that customer acquisition prices have not yet risen to reflect the lifetime value of a locked-in customer. Once they have, the window has closed.
Pro tip Watch what rivals are willing to pay per signup; free trials turning into bounties is the signal.
- 5
Assess relative position against your vintage
For the three common middle-phase powers, size decides the outcome. If a competitor of the same technology vintage is several years ahead, model what happens to you when the market settles.
Pro tip The exception is a rival gaining enormous relative share whose model has a visible structural flaw; then ask why and whether it continues.
Watch out A lead in relative share compounds through the shakeout rather than eroding.
- 6
Keep the decision with the people in the data
Because information changes radically during takeoff, the founder and their team must process it themselves. The strategist's contribution is a framework they can apply in real time, not a recommendation.
Pro tip Use a single-page reference of the seven powers to make the call live in a meeting.
In the wild
Around 1984 or 1985 Helmer toured a PC maker called Cromemco: cash positive, growing triple digits, a big distribution deal with Sears. He asked one of the founders what they would do when the shakeout came, and the founder nearly threw him out of the office insisting there would never be one. The company's claim to fame was being the largest S-100 bus computer maker, an advantage that mattered only while the rising tide raised all boats. Competitive arbitrage had simply not happened yet.
→ Takeoff-phase health was mistaken for durable position, and the shakeout arrived anyway.
Helmer notes that early automobile and personal computer markets each supported dozens or hundreds of viable, sometimes wildly profitable competitors. Nobody knew the right model, there were more customers than product, and being profitable said nothing about surviving. The eventual shakeouts were decided by which firms had established a middle-phase power before the market settled.
→ Broad early viability collapsed into a handful of firms that held scale, network or switching-cost barriers.
Common mistakes
Assuming the window stays open
Establishing power is a step change with a closing window. A company that defers building a barrier while it optimises growth often finds the barrier is no longer establishable at all.
Outsourcing takeoff strategy to an expert
During the flux phase the information changes too fast for an outside strategist or a planning cycle. Helmer's own conclusion was that founders needed teaching to fish rather than recommendations.
Reading current profitability as position
In takeoff there are more customers than product, so many players are profitable simultaneously. That is an absence of competitive arbitrage, not evidence of a barrier.
Is it for you?
Best for
Founders and investors choosing which barrier to build, and when, in a fast-moving market.
Not ideal for
Mature, stable industries where the establishable powers are already fixed and the question is operational execution.
From the transcript
“the path to establishing that kind of persistence is not linear. There's a step change.”
“that's why the switching cost is in the takeoff phase, because that's the period in which the true economics are not yet reflected in the…”
“network economy, scale economy, switching costs, those are the three most common ones”
From the episode
7 Powers with Hamilton Helmer