When investors ask why a bigger, more established company won't copy your idea, remember that you have no reason to stop in your tracks.
22 Oct, 2017ENTREPRENEUR.COM
Every entrepreneur begins with a vision: how to solve a real-world problem by creating a product or service to transform people’s lives in a meaningful way. That vision evolves as it’s brought to life. And in that process, it's shaped by its creator's deeper understanding of the challenges and the opportunities which, for that creator, stand between seeing an opening and realizing the potential of his or her idea.
Those challenges are: How to build it, who will buy it, what to call it, how to pitch it and when to launch it.
Along the way, that vision becomes more focused as the entrepreneur encounters a unique series of twists and turns before his or her product is ready for mass consumption. Throughout that journey, many entrepreneurs repeatedly hear the same question, especially if they're based in the tech sector:
“Can’t Amazon, Apple, Google or Facebook build the same thing?”
It’s unlikely that this is the first time you’ve thought about this question. The tone, however, in which it might be asked by an investor, an already successful entrepreneur or someone else sitting across the table from you will likely carry a hint of frustration.
When I launched my company on Indiegogo in 2013, I heard this question often, framed around the fear that a major home security company could easily take an approach similar to ours (like an ADT) and out-gun us with its vast resources and market share. The question was typically worded along the lines of, "What happens if they move from the professional to the consumer space?”
What was fascinating was to see early in the launch process that even though we heard that question from investors and industry professionals, we never heard it from consumers -- who clearly understood why rapid advancement in technology would more logically come from a startup and not a half-century-old security company.
It’s certainly easy to give in to your fear that a Google or Amazon might turn its attention to you; but taking that challenge head-on will help you articulate the secret sauce of your business and determine your place in the wider market.
Given that it’s hard to read an annual report nowadays that doesn’t reference Amazon in some way, shape or form, a little fear is certainly understandable. Yet we all know that success isn't limited to the big and the established. We also know that many young companies are shaping the future. So, how is that possible, given the seemingly endless appetites of the largest players among us? I’ll give you four reasons:
No one company can do everything. Perhaps Amazon has the capability to do what you’re offering, but will it? Is it central to that company's core business? Its future business interests? If it’s not, then there may be a significant opportunity for you to step in now.
You may be uniquely qualified to fill a real gap in the market. As we saw with our company, Canary, the home security market has long been successful within a small universe of households and businesses; but in actuality, no one was focusing on the broader-market opportunity. We saw this gap as an opportunity to service an oft-ignored segment of the market with a much more intelligent, software-first (rather than hardware-first) solution.
Competition is essential, and has its benefits. Amazon and Google are pushing hard to own the home speaker/voice-controlled market right now (with Amazon currently in the lead). For example, they’re creating ecosystems around their products that are either integrated or stand on their own. That competition will drive both of them in similar directions, as they try to solve the most number of problems for the most people.
But your specific problem won’t likely be a priority, as it will take a back seat to making the product as universal as possible. Startups can take risks and test concepts the big guys can’t always entertain. So . . . you may be just what the consumer ordered.
Related: You can now find jobs on BEAM
Often, focus wins. If you’re starting a company, chances are that your team is small -- meaning its members aren’t distracted by other projects and can home in their focus on one thing: bringing the vision to life. A startup with a team a fraction of the size of a Google or Apple development team typically has more focus and synergy, and is able to deliver quality outputs, with care, faster than industry incumbents.
As a startup founder, you have already taken the biggest risk an entrepreneur must take: striking out on your own. Unfortunately, many people are going to question the worthiness of that decision every step of the way. Snapchat took a $3 billion dollar risk to this effect when it decided not to sell to Facebook. CEO Evan Spiegel will undoubtedly be forever fielding questions from all directions about why he didn’t sell, even as the company comes out the other side of its public offering.
I was once offered the opportunity to build integrations between my company and some of the largest tech corporations out there; this could have been very positive for us from both a PR and financial perspective. But, upon review, we realized that with such an integration, the security of our customers’ videos could have been compromised, as data security was a secondary concern for tech corporations.
On that basis, I decided that even though an integration would have been financially beneficial in the short term, it would have compromised critical values I hold about privacy and data protection.
So, to return to the Snapchat example, we may not all be so fortunate to end up with a $3 billion offer on the table to turn down, but Snapchat is a prime example of why sticking to your company’s ethos is necessary -- even if it becomes a necessary risk. Our company has built what we regard as a mission of fearlessness into everything we do.We want to empower people to live fearless lives, and that starts at home, so to speak.
We knew that there might be some risk tolerance or outside-the-box thinking going in by our not worrying about those big companies; but genuine fearlessness is not in their dictionary.
For our part, sticking to our ethos of fearlessness ensures we’re always moving in the right direction.
No one knows your company as well as you do; your advantage is the focus and commitment you have to your ultimate vision. And, if your product or service ultimately improves, changes or transforms the lives of your customers -- be they consumers, businesses or, dare I say, Amazon -- the naysayers will be silenced.
Just remember: When that inevitable question comes about why someone bigger, with a better track record doesn’t take this on, there is no reason for you to stop in your tracks. If you can promote clarity in what you are doing and confidence in yourself, and highlight the customer validation of your product in the market, you'll be ready for the next step: moving forward and forging your company’s own path.
We'll all be waiting to see it.