Low barriers to entry businesses are generally characterized that way due to the ease at which new entrants can emerge and compete, but there is also a correlation with the new entrants’ perception of its chances of success. It is not just easy to enter the market, but new entrants also generally believe it will be easier to be successful than it really is. When the friction to compete is low, it is *very hard* to be successful. Unfortunately, in seemingly simple commercial endeavors success will be led by elite operators who simply execute at a different level or are playing a different game than the competitors think they are playing. “If you can’t spot the sucker at the table, it’s you.” This is generally true for all low barriers to entry businesses. In these businesses many think they can be successful, but it’s very hard to stand the test of time. This can be unfortunate for those with false perceptions of their probability of success, but generally new entrants, even if unsuccessful, help drive continuous improvement from the leaders through competitive pressure. This is typically good for the market.
