Is It Possible To Compete With Google As A Startup?

3 November, 2017 / Articles

In 2004, Google was already a goliath when it came to data. It had money, servers, network infrastructure, leadership, brand power and everything else. However, over the next decade and more, they desperately watched the upstarts Facebook, Youtube, Twitter and others compete happily among themselves not even noticing Google’s presence.

Google desperately tried Google videos and then had to concede defeat and buy Youtube. They failed at Orkut, Google+, Buzz. They tried with billions in pocket, but failed to even be considered a viable competitor in that category. They had an answers tool that was the ugly, unused cousin of Quora. They had the Knol to compete with Wikipedia and you would just laugh it out. They had Wave in a clueless way that Slack just perfected. They had location tools and so many other categories where they were pushed out.

Instagram came with a photo app and in months made Picasa look like a ugly dinosaur. Most importantly, Whatsapp came in the category – messenger – that was the heart of all the major tech companies. Google had its chat and same with Yahoo, Microsoft, Facebook, etc. However, Whatsapp treated these existing messengers like flies squatting on a wall just shooed away by the majestic WhatsApp. Their competitor is Telegram and the traditional Silicon Valley majors all looked totally incompetent and out of the picture.

Dropbox, Box and plenty of examples to fill a whole book.

Dozens of companies have successfully competed and not just won, but made Google look like a dinosaur that could not be even considered a player.

And these are in areas where Google considered them their core competence.

Then there are plenty of areas like robotics, wearables, AR/VR or something as simple as RSS readers – where Google played reluctantly and was quite easy to beat.

I have worked both in large companies like Microsoft in teams competing with startups [and with all our money we played like distant, losing cousins]. And I have worked in successful mid sized startups in gaps that big companies could have played. And in smaller startups competing.

Big companies often fail against determined startups because:

Information passing is very slow. In a startup, a key piece of information gets passed around in minutes and gets acted upon in days. In a large company, it gets passed through the hierarchies and is often lost. Even if it is critical, it fights with other firefighting priorities of leaders and after everyone gets to a meeting table eventually [like in weeks/months], there is a groupthink.

Large companies are like large ships – too slow to turn. At Microsoft, we were capable of producing a much better operating system. However, we couldn’t because it would break backward compatibility, cannibalize some product of our partner or some team or mess with some lingering weak point of one key leader.

Budget constraints hampering decision making. Large companies have annual budgets and targets. They cannot change stuff everyday. Thus, in very fast moving areas they would find budget allocation completely screwed up. Wall Street would also help distract the large companies and have them chase some some pointless number.

There is an information asymmetry. Large companies are quite public and it is quite easy to get a lot of information. For instance, we know every nut and bolt of our large, competitor robotics company. However, they are unlikely to have even noticed our presence [too small to bother yet] – let alone anything technical. By the time the big companies notice, it would often be too late. That is how two engineering founders can produce a search engine that would beat biggest goliaths.

It is easy to get PR and free publicity. It is often easy to get positive publicity for a startup. Large companies have to pay a lot of money to get positive publicity. And everyone will be ready to jump on them the moment large guys fail. Nobody decent likes to jump on a small guy falling.

Regulatory, legal or social hurdles. Big companies get very well noticed by the regulators and press. At Microsoft, the first day my manager told me to never look up any patents or any open source code. Even accidentally having something wrong entered could ruin billions. That hampered productivity. Whatever Google does is also watched by every government. What startups like ours can get away with cannot be done at Google. In new markets with uncertain rules it is thus easier to be a startup than the Google whose lawyers would warn against getting into grey areas. By the time the engineering team at Google wins the lawyers in those grey areas, the startups would be three steps ahead.

Motivation. At startups everyone’s life is at stake if we don’t win a deal. People work with a zeal when put in a corner. At large companies the motivation is substantially low. Even if you don’t win the deal your meal is guaranteed. And on the other hand, if you win you might get a promotion and more sunlight at best.

Lost direction: Large companies often can lose their vision or purpose. Even motivated workers would find it hard to find the direction to move. Rather than moving in one direction they will clumsily move everywhere. At one point in Microsoft we had three different Dropbox competitors and no one knew all the different pet/R&D projects happening across the company.

Priorities. Large companies are either very distracted with too many product divisions or at the process of cutting out their key business segments. Both are great for startups. Unless you are competing with a core priority – like search/advertising for Google or OS for Microsoft, your buddy at Google might not get the priority resources or the A-team to compete with you.

The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.

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