The common perception for most entrepreneurs is that if they work hard enough and their product is compelling enough, they will break through eventually.
Unfortunately, we live in the real world, and sometimes other factors such as insider groups, cabals and monopolies come into play, preventing the progress of any new entrants to the market.
In this article, we look at everything entrepreneurs should know about such skulduggery.
Here goes…
Cabal and Cartel Definition
A cabal is a collection of people who are united in some way to protect and promote their private interests.
These cliques often operate in secrecy and are created to collude to promote their private views and business interests.
While cabals are often political in nature and orchestrated by individuals, a cartel is a collection of businesses that collude to limit competition or to preserve market share.
Generally speaking, cabals and cartels are often illegal because they deal with anti-competitive practices that limit consumer choice and distort markets.
How Insider Groups Form
These insider groups are often formed around shared background, interests or information.
Shared backgrounds may include (Employment at the same firms, same educational establishments, etc.).
Closed communication channels (private circles, invite-only events).
Reciprocal favours (insider appointments, investment opportunities, special partnerships).
While some of these practices may be legitimate, they can also create environments where outsiders may not be able to gain access.
As such, many aspiring entrepreneurs may find it hard or impossible to break through.
Unfortunately, merit often does not enter the frame with these insider groups. It won’t matter how great you or your product is. If you are outside of the network, it will be almost impossible to break through.
Read this article on psychological operations or psyops:
Monopolies
Monopolies are the most concentrated form of market control. A monopoly is where a single entity dominates an entire industry.
Monopolies can form for a variety of reasons, but often they form out of first-mover advantage and network effects.
The more users a platform has, the more valuable it becomes. This creates a self- reinforcing cycle that is difficult for new entrants to compete with.
They can also be formed through aggressive acquisition, buying out competitors or legal barriers that prevent new entrants.
In today’s digital age, companies that dominate in data collection and platform dominance can quickly become monopolies.
While monopolies can be illegal, many can be legitimate. For example, a company may become a natural monopoly due to a superior product or service.
However, a company can be considered an illegal monopoly if it engages in price collusion, group boycotts or anti-competitive practices in order to maintain market dominance.
Real World Example
While all this may seem very cloak-and-dagger and almost conspiratorial, there are real- world examples of such practices.
One of the most famous cases is probably the Richard Branson v British Airways (“Dirty Tricks”) case.
Sir Richard Branson is a well-known entrepreneur and businessman; however, in 1992, Branson sued British Airways, a market-leading airline for what he claimed were “Dirty Tricks”.
British Airways was accused of carrying out a number of uncompetitive practices, including hacking into Virgin’s computers and impersonating Virgin staff to get customer data.
Branson also accused British Airways of trying to get Virgin customers to switch to British Airways by contacting Virgin’s customers and telling them their Virgin flight had been delayed when it had not.
The court action led to Virgin winning £3.51 million in compensation.
Why Does it Matter?
The main reason why this matters is the impact on consumers.
If Richard Branson had not won his case against British Airways, we may not have the cheap access to flights that we have today.
Fewer competitors mean higher prices.
Fewer options for consumers inevitably leads to lower quality service and less innovation.
In essence, the consumer will always lose out when there are concentrated power groups or monopolies in place.
When business success depends more on networks rather than actual ability, the whole economy suffers.
Companies that are grown in environments where merit is not rewarded may result in organisations that do not reach their full potential.
It may also lead to companies that may be unable to keep up with the ever-changing needs of the marketplace.
There is also the risk that if a dominant provider were to fail for whatever reason, the consequences could ripple throughout the entire economy.
Other risk factors include:
- Barriers to Entry
Entrepreneurs may find it nearly impossible to enter markets dominated by established players with deep pockets and insider connections. - Regulatory Capture
Powerful firms can influence policymakers, shaping regulations in ways that protect their position rather than serve the public interest. - Inequality of Opportunity
When access to success depends more on networks than merit, economic mobility declines and inequality widens.
What Entrepreneurs Must Know
Unfortunately, for entrepreneurs in the digital age, it’s probably even easier for insider groups, cabals and monopolies to form.
Where information can easily be shared across encrypted private chat messages, private WhatsApp groups and other digital communication channels, these networks are probably more prevalent than ever before.
However, there is some hope. While competing with a market leader or insider group may be formidable, there are some advantages for new entrants.
New entrants are often nimble and are able to move quickly with ever-changing customer needs.
Larger organisations may need many months, even years, to deal with changing market conditions, and by then it may be too late.
In addition, as consumers become increasingly savvy, they are becoming increasingly wary and concerned about their data being utilised by one or two large worldwide corporations.
Users who are reliant on one or two major platforms for online income, for example, may want to seek alternatives to diversify income streams.
As a result, there may be opportunities for entrepreneurs to offer localised or niche alternatives to the large corporate companies that dominate the marketplace.
How to Win Against Insider Groups and Cabals
There are a few strategies that can give you an edge against insider groups and monopolies, but it should be noted that such wins are rare.
Expose Illegal Behaviour.
Utilise technology to break open closed systems.
Change the game. Be nimble and unpredictable. Don’t follow the norm.
Stay close to your customers and operate ethically to defeat smear campaigns.
Avoid joining such a group yourself. Remember, while some groups may be legitimate, those that collude to fix prices, exclude competitors, or distort markets may be illegal.
Everything you have worked hard for could be put at risk if you join such a group and the group is exposed.
Final thoughts
Entrepreneurship is not just about fundraising, large valuations and glitzy marketing.
There is a dark side to entrepreneurship that founders need to be aware of.
Insider groups, cabals and monopolies are real and are features of an economic system that is built on incentives and human relationships.
The key to overcoming these challenges is awareness. While some insider groups and monopolies can be legitimate, it’s important to understand when things cross the line.
If a group is encouraging price manipulation, excluding competition or conducting smear campaigns, that should set off alarm bells.
Savvy entrepreneurs should be ready to walk away if the opportunity to join such a group arises.
Founders should operate ethically and be prepared to ‘change the game’.
Entrepreneurs should keep close to their customers, remain nimble and unpredictable to defeat insider groups and cabals.
Good luck!
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