When you speak about tech giants Microsoft, Apple, Facebook, Google and Amazon are the first ones which come into our mind. They are the ones who have the advantage that makes them brave enough to fight against competitors. But is competing against tech company giants really that difficult?
Here are some strategies and tricks for you based on Start It Up
Have you heard about the network effect before? If not, here is a quick definition of it by The Network Effects Bible, James Currier:
“mechanisms in a product and business where every new user makes the product/service/experience more valuable to every other user.”
In other words, think about WhatsApp. If none of our friends would use it, it would not have any use. As your network is using it as the go-to messaging app, WhatsApp has more value and creates a better experience for you compared to other applications. This effect is far cheaper than any ad-based or sales-based strategies. In addition to that, it is much harder to copy.
According to a report by NFX, Network effects have a lot of influence. 70% of value creation in tech from the years between 1994 to 2017 among 336 companies that reached a valuation of over 1 billion USD. Dropbox and Figma mastered the competition through the network effect.
This effect is not the only strategy to go for but it makes it easier to look forward.
Differentiate, differentiate, differentiate
Brand identity plays a big role in this. You have to know your who, how, why, which and more. Brand identity helps businesses to differentiate their business from competitors and helps them to position the brand correctly. Humans love to be unique, why shouldn’t your brand? Stand out in the crowd. It is easier to compete indirectly than directly when it comes to tech giants. So not just your brand but your product, service, or platform needs to be differentiated from your biggest competitors for you to have an advantage in your market and industry.
Let’s have a look at Shopify
Shopify is known for selling a platform that facilitates the relationship between third-party sellers and consumers. That’s the exact reason why they are doing this good. Comparing Spotify to Amazon, the e-commerce giant is a product aggregator that controls this relationship between the two actors.
Ben Thompson, a business analyst explains the Shopify-Amazon differences like this:
“This is how Shopify can both, in the long run, be the biggest competitor to Amazon even as it is a company that Amazon can’t compete with: Amazon is pursuing customers and bringing suppliers and merchants onto its platform on its own terms; Shopify is giving merchants an opportunity to differentiate themselves while bearing no risk if they fail.”
So to compete against tech giants can be difficult. Therefore, it is easier to compete indirectly instead of directly.
Make your product better
Your product or service has to be awesome if you are in a well-established market. Your competitors will win if your offers are the same or only a bit better.
Have a look at Mozilla Firefox. They got run over by Google. Not because Google played dirty, but because Google built a better browser than Firefox had.
In the time before the global pandemic, a lot of people did not know about Zoom. After COVID-19 hit the world, the company had rapid growth. Any idea why? Skype and Google meet had lagging and buggy connections, Zoom did not.
Differentiate your company culture
The structure of your company will be reflected in your company’s actions. A Harvard Business School study found out that
“co-located, focused product teams created software that tended more toward tightly-coupled, monolithic codebases. Whereas the open-source projects resulted in more modular, decomposed code bases.”
Open-Source codebases allowed for faster and more autonomous deployment cycles than their traditional, co-located competitors.
Have a look at your competitors and how they operate differently. For example, be the first remote-first, hybrid, open-source company. Even running a non-hierarchical company organisation can be a way to differentiate yourself. When you start making changes in how you look and operate, the things you offer and even your business strategy will follow.
An Australian tech company, Atlassian, with a 50 billion USD valuation had a whole different market entry strategy. Normally the way a market would be entered would be top-down, however, Atlassian entered with a bottom-up strategy with a heavy salesforce. They were forced to adapt their business strategy as well, as they were assisted and outside of the tech focus.
The developer tool, GitLab, competes directly against Microsoft’s GitHub but their company structure is completely different. The business employs over 1000 people remotely. They also set a full transparency rule and share their whole handbook publicly.
Plan and execute for a long-term
It is difficult in partnerships to work in a long-term manner. Commonly, last-minute changes have to be made because a director does not like something or he/she changes his/her mind. If you take a look at Microsoft’s four slightly different task management tools you can see wide bureaucracy makes a cohesive, long-term product vision hard. If you compare startups to those big tech firms, you will see that everyone in a startup company works towards one vision in a focused way.
Be afraid of startups not tech giants
Y Combinator co-founder Paul Graham described it the best:
“The people at Google are smart but no smarter than you; they’re not as motivated, because Google is not going to go out of business if this one product fails; and even at Google, they have a lot of bureaucracy to slow them down.
What you should fear, as a startup, is not the established players but other startups you don’t know exist yet. They’re way more dangerous than Google because, like you, they’re cornered animals…You should compete against what someone else could be doing, not just what you can see people doing.
At the end of the day competing against tech giants is a problem. However, if you have built something which grabs their attention, it is because you are innovative. Microsoft and Google could be cutting into Slack’s market share. Slack, on the other hand, has built a 15 billion USD company with millions of users and thousands of employees. These numbers are increasing.
You have to understand that you do not need to be a multi-billion dollar business to be successful and leave an impact. If you are creating jobs, creating things that people love in a sustainable manner, you are winning.
Let’s look at these winners one more time:
Zoom: Value – 50 billion USD. Managed to build a successful platform for video conferencing where big tech giants like Microsoft and Google operate.
Spotify: Value – 50 billion USD. Has become a market leader in music streaming while competing directly against Apple and Google.
Dropbox: Value – 10 billion USD. Apple and Microsoft usually preinstall their competitive products on their operating systems. Google offers a large amount of storage for free. However, Dropbox is managing to compete against those giants.
Shopify: Value – 100 billion USD. Managed to build another giant in an Amazon dominated e-commerce market.
Competing against tech company giants is possible!
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