Even the greatest companies can only do three things well at a time.
Last week I wrote about why we will invest in companies that compete with Amazon. I noted that most of the $1bn+ outcomes in e-commerce have been online multi-brand retailers, that by definition compete with Amazon.
It does seem astonishing that a startup can beat a giant like Amazon, ever, in any area. But we’ve seen this play out time and again with many big companies. How did Snapchat beat Facebook to the youth market over the last few years? (Remember Poke?). How did Facebook beat Google in social media in the early 2000s? (Remember Orkut?) How did Google beat Yahoo and Microsoft in search? Back in the late 90s and early 2000s, Yahoo and Microsoft were the Facebook, Google and Amazon of their time.
So how does a startup beat a massive tech company?
These great companies can only do a few things well at a time. The scarce resource in a big company is executive attention. What the CEO pays attention to gets done, and done well. These are the projects that gets the A team resources and they typically succeed. Outside of the top three priorities, you’re looking at the B team resources. And outside of the top ten, the C team.
A startup has no chance against the A team from an internet giant. But they should have a very strong chance against a C team.
Fundamentally, this is why I’m an optimist about startup’s ability to defeat the internet giants. Not all startups. Not all the time. But some of the startups. Some of the time. And that’s enough.
Just make sure that if you’re competing with one of the giants, you’re not working on one of their top three priorities. What do you think the top three are for each of Facebook, Amazon and Google? Reply with your answers and I’ll leave my guesses there also.
UPDATE: While I believe the big three can only do three things well at a time, I also believe that startups can only do one thing well at a time and wrote a new post about that.
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