Google can crush you now Or can it

  • When an entrepreneur talks about his/her idea to the potential founders, partners, investors, supporters, he/she often encounters the “What if Google?” syndrome. I have seen many people remarking during an elevator pitch “Google can easily crush you”, “Google can build it overnight”, and so on. Critics often say that if your market is too big, it will be worth for Google to put a small effort and capture your market.

  • People making these remarks often forget that the primary focus of large companies like Google, Microsoft, Facebook, etc. is making profit. They cannot make profit in the entrepreneurial and experimental business model of start-ups. Big companies do not have agility like start-ups do and they don’t compete against start-ups. By the time they think about competing against a start-up, it’s already too late for them. For example, Google took 7 years to make Google+ (Plus) to compete against Facebook and it was too late because by that time Facebook already had 700 million users. Facebook tried to compete with Foursquare using its Places, but in a year it gave up the competition and withdrew it’s offering Places from the users. In order to compete with Foursquare, Facebook acquired another fast growing 3 years old start-up Gowalla in December 2011. Facebook will integrate Gowalla with its Timeline product.

  • Start-ups should not worry about big companies competing with them. Even if the big companies wish to compete, they will not be able to compete. Big companies will rather wait and buy your start-up or similar start-ups like yours at a premium price of $100-300 million rather than spending $10-20 million to build such things themselves.

  • In last 10 years Google has acquired 150 companies and since 2010 it has been acquiring 1 company every week. The companies acquired by Google are YouTube ($1.65 billion in 2006), Picasa, DoubleClick ($3.1 billion in 2007), Android ($50 million in 2005), Motorola Mobility ($12.5 billion in 2011), and many more. Google acquires companies mostly as strategic acquisition while Facebook acquires companies as talent acquisition. Facebook’s past history of acquisition explains that acquires a company to acquire the talent and the talented founders of the company so that Facebook can remain entrepreneurial in its journey. Many other companies acquire companies to kill brands and thus the competition.

  • Bottom-line is that before someone like Google comes along to compete with you, many copycats versions of your innovative company will mushroom up. As we have seen recently with GroupOn, just after 6-9 months of its inception, many copycat versions mushroomed all over the world. Now every city in the world has few such copycats fighting to capture the market from each other. The copycat version of your idea should be a bigger threat for you rather than big companies like Google. You can outsell the copycat by your great futuristic vision and focusing on the problem you are trying to solve. Copycats will lose the game since they will mostly lack the long term vision of yours.

  • How to crush the competition?

  • 1. ‘A Giant as an Ally’
  • To compete against giants like Google, find ‘A Giant as an Ally’. If larger companies like Google come into your market to compete against you then the big competitors of this giant like Microsoft, Amazon, Yahoo, Facebook will notice this. Try to make alliance with them because either they might be planning to come into the market as well or they have had an unsuccessful exit from this market due to a flawed product. One should take this as an opportunity to make partnership with one such large company out there. Larger companies have massive distribution channels and network, and partnership with them will lead to these channels without loss of speed or resources. Further, at the end of this partnership may lead to an acquisition by such a large company at a handsome valuation.

  • 2. False competitors due to incorrect information:
  • Press, media, and potential partners are very fast in labeling your start-up as a competitor to another start-up or a company working on a similar domain. For example, Twitter and Facebook were tagged as each other’s competitors many years ago, while these two are very different companies. Though they are both social networking oriented companies, Facebook is for social networking with a person you know while Twitter is for networking with a person you want to know. Another example is that of Flipboard and OnSwipe. Flipboard is considered as a competitor to OnSwipe as both provide beautiful user interfaces on iPad but their businesses are entirely different. Till the time your company is not mature enough, and your vision and product is does not have a distinct identity in the market, one has to take a mix of explanations about the difference between you and your false competitors while having one-to-one conversations. Learn to live with it and use such conversations for strengthening the distinct identity of your product/vision.

  • 3. Don’t try to win on features:
  • It’s very tempting for techies to add more features to compete against their competitors but it will lead to a product that no one wants. It happened with iPad’s competitors. iPad’s competitors tried to add more features like processor speed, storage space or 3D screens. But till now, no one is even close to iPad in the tablet market. Everyone is trying not to beat the APPLE, but to be the APPLE, and this is one of the reasons for their failure. Find the killer feature of your product which will help you in “Crossing the Chasm” and then focus on your killer feature which will help you win the market and kill the competition.

  • 4. Low price wars will take you to the bottom rather to the top:
  • Majority of the entrepreneurs think that they can kill the competition by lowering their price against their competitors. If your customers come to you solely on the basis of low price then do not get tempted to lower your price constantly to keep them and beat the competition. You should focus on the product quality with optimal pricing to get the optimal cash to scale your business. If you offered your product, which you are selling on a certain price, to a customer free-of-charge, then you won’t be able to sell it at a price later on without losing your customers. Lowering the price game will take you to the bottom of the race.

  • 5. You can win over large companies as speed wins:
  • Large size companies like Microsoft, IBM, etc. are often slow simply due to their size. They may compete in your market but they will not have the speed to stay in the market. Large companies have road-map of 5 years and they have to stick with their road-map. They can’t iterate the development process or marketing process faster like you can or turn the path by spending few pennies. Big companies might have many employees and lots of money but they can’t add new features very fast like you can; and they will try to buy you once you already have won the market and that’s the good news.

  • 6. Cash is very essential for scaling your company:
  • Once you start to grow, then many competitors will come into your market. In order to compete against them, you need to scale up your growth and thus you will need cash. Many of us think that once a product is successful, the job is done and everything will be taken care of. However, when the business actually starts growing at a rocket speed, financial barriers will always be experienced. You are lucky to reach this growth point and make sure and plan ahead to get enough cash from investors or any other financial means to leave your competitors behind at this critical point.

  • 7. Try to make partnership which brings traffic or money or both to the table:
  • Google won the search engine wars not because they had the best search algorithm in the world but because they gained partners by helping them make money. They empowered their publishers to get traffic or money or both and thus won the search engine wars. Twitter and Facebook were successful in killing the search engines as referral source by driving the audience and traffic to their publishers and partners.

  • 8. Build a generic product and avoid the buy vs build problem:
  • Try to build a generic product which is flexible enough and can furnish needs of most customers with out custom development. The customer can customized themselves according to their need. “Build for all rather than build for one” – WordPress won the competition against Moveable by building a fully flexible platform. You should not trap yourself in to the build-vs-buy scenario. Your product needs to become platform that others can build upon to meet their needs. This will often demand sacrificing some short term gains for long term sustainability. Any and all changes you make to your software should be applicable to the greater good of the platform. This means no custom development and no bending to the wills of customer’s crazy demands. Google Android platform or Facebook SDK or any large company’s platform is meant for “build for all rather than build for one”. That is the reason for its wide adoption by the mass users.

  • 9. You are your biggest competitor:
  • Start-up is often its own competitor. The entrepreneurs fight the real battle against themselves each day. The battle of fighting against their own fear and weakness, you should not completely ignore this biggest battle happening inside your own start-up office or “Founder’s Garage”. Start-ups come down to pure execution of a strategy on a daily basis and maintaining the faith upon each co-founders for the long haul. Most entrepreneurs don’t lose to competitors, but they lose the will to fight and surrender to the founder’s usual pain of following a path of entrepreneurship.

  • Finally, the most important of above lessons is to remember that you are your own competitor. Keep fighting the fight and be prepared for the war, not just the battle. Google can’t crush you unless you give up.

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