Can startups beat Google?

In 2004, Google was already a goliath when it comes 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 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. And 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 as 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.

Big companies often fail against determined startups because:

1. 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 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.
2. Large companies are like large ships — too slow to turn. At Microsoft, the team is capable of producing much better operating system. However, they 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.
3. 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 screwedup. Wall Street would also help distract the large companies and have them chase some some pointless number.
4. 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] — leave alone anything technical. By the time the big companies notice, it would often be too late. That is how two engineering founders produce a search engine that would beat biggest goliaths.
5. 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 $$ 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.
6. Regulatory, legal or social hurdles. Big companies get very well noticed by the regulators and press. Even accidentally having something wrong as with open source code enter could ruin billions. That hampers 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 easy to be a startup than the Google whose lawyers would warn against getting into grey areas. By the team the engineering team at Google wins the lawyers in those grey areas the startups would be 3 steps ahead.
7. 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.
8. 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 3 different Dropbox competitors and no one knew all the different pet/R&D projects happening across the company.
9. 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 competiting 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.

Tips to compete with large companies:

1. Go for speed. Since large companies too slow to move, find market areas where speed is the essence. Essentially you will be the jetski against an ocean liner. You cannot carry more weight than the ocean liner but can always race it. Rather than going headon, just zoom around it as the marine engineers on the big ship wonder what is going on.
2. Go for the grey. In new technologies there are often very grey areas that is not clear whether it is legal or illegal. Startups can get into those gaps as large competitors cannot afford to follow. The risk would simply be too large if things turn out to be illegal for the large corporation. Startups often plead innocence or in the worst case die. Still worth it.
3. Don’t stand against the bulldozer. Go for the niche. It would be suicidal to build a garden variety search engine against Google. Rather pick areas that are too small for Google to notice. That is what Bill Gates did to IBM in selling DOS. If you are as big and fat as Google you might find it hard to bend down to notice your toes. The gap between the toes are way too big for small startups to penetrate. And we can multiply like rabbits — they cannot.
4. Don’t poke the bear. The information asymmetry is your advantage and it is good for you to be not noticed by the big competitor. Until your game is top level, don’t do stuff that would make the executives queasy and insecure. They might not compete with you, but can be mean and kill you [Netscape!].
5. Play the underdog. People love underdogs and play that well. Instead of being assholes if the startup founders start being likeable underdogs, there will be atleast free PR. Media could not wait to write a success story of David vs the goliath. Everyone would like to see Google fail or be embarassed.

All said, it is statistically unlikely for anyone to win Google in any product category. But, where is glory if you are not doing statistically unlikely things?

Phani Marupaka