The Leak in the Moat
Kindle Scribe, Lasso, and the quiet cost of neglecting secondary experiences
A few weeks ago, prior to writing “Three Salesmen, No Connector,” I was actively reading The Tipping Point—highlighting and taking notes—switching back and forth between my Kindle and the keyboard on my desk. In retrospect, this was a painful experience. Casual learning in the digital world should be much simpler. I just need a device containing my books and notes, and my Kindle Paperwhite technically stores both. Why do I then only use it for its moat, the core reading experience?
The Kindle provides a sub-par note-taking functionality. While entry is relatively easy, the software is slow, organization is overwhelming, and retrieval is hard. So, whenever I read on the Kindle, I always have another device, either my iPad or a Mac, to take notes in Obsidian or Bear. The constant switching between two devices has led me to use my Kindle much less. I don’t get enough value out of it compared to my other hardware and have considerably slowed my upgrade cycle.
Products, especially category leaders from incumbents, over-index on creating a world-class experience for the primary functionality while neglecting supplementary experiences. This creates friction for users, leading them to find alternative solutions for that secondary job. The incumbents will continue to retain users because of prohibitive switching costs, but will lose these secondary jobs to other products. Users will spend less time on the incumbent’s products and affinity will go down, becoming an invisible leak in what would appear to be a healthy funnel only until it’s no longer invisible.
Instagram presents another example. Not too long ago, Meta was not built for vertical video. TikTok capitalized on this opportunity by making vertical video creation, distribution, and consumption extremely easy. It began capturing the audience’s attention—the same audience that engaged with content on Instagram. But these users didn’t delete their Instagram accounts. They just devoted less time there. This quickly turned into an existential risk for the market leader, culminating in the launch of Reels and the shift to a video-first strategy (much to my chagrin, but that’s a whole other post).
Incumbents wedge segments to serve users with secondary jobs. Amazon created the Kindle Scribe for note-takers, and Meta (temporarily) created Lasso for vertical videos. The failure of these products and the rise of products like reMarkable and TikTok show how quickly the invisible leak can become visible.
Ben Thompson’s Aggregation Theory holds that internet-native platforms can serve every user near-zero marginal cost. Their primary investment comes in the form of huge fixed costs, but once the solution is scaled, every additional user can be served without considerable additional spending. And AI-accelerated product development has only driven the cost even lower. But rather than leveraging AI to patch the invisible leak, the incumbents are using it to further strengthen the visible moat. I would fix the leak before the water in the moat dries up.