Depends. If you're on the market for a time period, customer A who bought your shady competitor's product will see all its warts quite soon. Meanwhile, your own customer B will be happy with your honest product.

The fence sitters on the marketplace might ask both A and B of their experiences and opinions. They will then calibrate that against A and B marketing. Maybe one or two customers might be random, but if it repeats over a longer time, things get quite obvious to everyone in the scene...

An amazing number of people make purchasing decisions without seeking advice from existing customers. There are industries where businesses almost never compare notes with each other. (Independent restaurants come to mind. Really, any field with a high rate of turnover.)

Also, the sunk cost fallacy means that some organizations will continue shoveling money at the bad system they already purchased because of the shiny marketing. If you're prepared to sell "upgrades" and consulting services around your product, it's sometimes possible to make more money from a bad product than one that "just works".

I'm not cynical enough to say that the situations I described are normal. But they are common enough.

Which I would counter with another short phrase:

The market can stay irrational longer than you can stay solvent. Your competitors earned some money and will gain interest on it, if they are smart.

And because they saved the money that you spent on building a good product, they now have more money to spend on marketing than you.

Staying solvent is fine if one is profitable.

The "market" the quote relates to is the stock market. Very different than selling products to be used.

If you invested in the product itself (instead of marketing), that can gain you something as well in the long term.

If you haven't seen this, you'll be in for a treat:

https://slatestarcodex.com/2014/07/30/meditations-on-moloch/

It's a very thorough discussion of the topic. A rather long read, but absolutely worth it.

Interesting read. What I don't get is that they compare Moloch (total competition) to Nature.

> (I’m not really sure how widely people appreciate the value of analogizing capitalism to evolution. Fit companies – defined as those that make the customer want to buy from them – survive, expand, and inspire future efforts, and unfit companies – defined as those no one wants to buy from – go bankrupt and die out along with their company DNA. The reasons Nature is red and tooth and claw are the same reasons the market is ruthless and exploitative)

But then nature has found ways to organize: the cells in our bodies don't compete in any obvious way, but they work together. Our right hand doesn't fight our left hand. Etc.

Perhaps Moloch is what you get when Nature reaches a level where evolution stops to work (or at the "edge" of evolution). We can't evolve as a planet because there is only one planet, and evolution would need many iterations sacrificing many individual planets on the way.

The human body (and most systems like it) essentially have lots and lots of systems whose essential purpose is to prevent the cells in our body from competing with each other, and when these systems break and allow our cells to compete freely with each other it leads to cancer.

Organizations into cells, organs, systems, is basically describing mergers and acquisitions, and also that companies have different roles inside them, each doing various tasks: marketing, sales, engineering, management, etc.

By coincidence, the same author has wrote an article about that very recently: https://slatestarcodex.com/2020/05/12/studies-on-slack/. In particular, see section II.

I'm still processing the article in my head, but as I understood it: it's important that all cells in your body share the same genome. For some reason, evolution in multicellular organisms can be seen as two-tier - competition between the cells, and competition between collections of cells (organism). The higher-level competition forces the individual cells to behave in fully-cooperative way; those organisms that can't enforce order within get cancer and die prematurely.

The mechanics of it seem sound, and it's a nice model for a lot of things, natural and otherwise, but I'm still confused about how such two-tiered evolution could've arisen in nature wrt. multi-cellular structures.