How to survive a startup in competition with a monopolist company
Is it worth it for young projects to get involved in competition, are there any advantages over the market’s “whales” and what is worth knowing when developing a startup in order to occupy a niche.
Any start-up, before starting to implement his own Barbarossa plan to conquer the market with the help of his innovative idea, should certainly study the springboard and ask himself the question: isn’t someone already doing the same thing? And if so, how can I do it better / better / faster / cheaper? (Underline whatever applicable). And if you have the answer to this question, then you are practically in a dam.
But the key word in this case is “practically.” After all, there are cases when there is already a huge company in the market, which you plan to occupy at least partially, which has a fairly good reputation.
')
Does this mean that you should forget about your idea and state the complete defeat of the Barbarossa plan, which was not even destined to begin to be implemented? “Not at all, no,” says Andrei Prudko, founder of the international freelancing platform for language professionals 2Polyglot.com , “We were not afraid to enter a market where there already exists a distinct leader. The main thing to remember is that you should not go into a frontal attack with a company that is many times larger than yours. When a monopolist controls the entire market, this does not mean that he fully controls all the individual niches in this market. And this is the key to the success of a startup in such a situation. If there is no unoccupied market, you can always create one yourself . ”
If we talk about the international freelancing market as a whole, then we can say with confidence that it is completely monopolized. And in the case of objections - as PayPal co-founder Peter Thiel spoke in his lecture for Stanford University: “There are two biggest lies in the competition: the monopolists claim that there are many more companies in the market besides them and that they are in a highly competitive market , and non-monopolistic companies assert that they own a monopoly . ”
Freelance market then and now
Number of freelancers by region
According to a McKinsey study, back in 2012 there were 30 million freelancers in the world, and by 2025 this figure would increase to 3 billion people.
In 2013, the number of freelancers in Europe increased by 45% from 6.2 million to 8.9 million people compared with 2004.
According to Forbes , in July 2014, freelancers and temporary employees in the United States accounted for about 15% of the country's total workforce, and it was predicted that by 2020 freelancers alone would be up to 16% of the total labor market. In October 2014, Upwork published data that there are 53 million freelancers in the United States, which already accounts for about 34% of America’s workforce. In 2015, the number of independent specialists increased by another 700 thousand, of which 60% began to earn more after leaving a permanent job. As can be seen from these studies, the international freelance market is growing faster than forecasts can be published.
It was from this cake that they decided to cut off their piece in the team of the Ukrainian start-up Polyglot and chose it to their liking: freelancing services for specialists of only the language sphere (translation of texts and speech, copywriting, tutoring of foreign languages).
“If a person needs shoes, he will prefer to go to a big shoe store, rather than go to the mall, where, for sure, they also sell shoes. Similarly, with the services of freelancers: if you need a translation of the text or writing text in any language, then most likely will choose a specialized freelance platform , ”says the founder Andrei Prudko.
Advantages of a startup over a monopolist company
It would seem that there can be no strengths compared to a huge company with a startup. How can a small and little-known project withstand an experienced and famous company? What are the secret advantages? - Just that he is small and little-known.
Advantage # 1. Little known
Low brand awareness of a startup allows it to experiment more often. For a beginner project, there is more than a base for maneuvers, in contrast to corporations, which themselves limit their circle of actions due to their size and the presence of a wide audience that they cannot throw, saying: “Sorry, we have a pivot”. The possibilities of experimenting with the functionality and design of large companies are very limited, because the slightest mistake on their part will be inflated by the media beyond recognition, which can harm the business. Almost everyone loyally treats startups: investors, media, venture funds and even their own audience.
Advantage number 2. Little
“Well, there are definitely no advantages here,” you think. Perhaps even to quote the ancient Roman poet Ovid: “A small state cannot compete with a large one; a small army cannot compete with a large one; a weak army cannot compete with a strong one . ” But you still make a mistake. Do you know what the biggest problem of large companies? “Despite a well-coordinated management mechanism, extended customer support and, possibly, a 100-person own call-center, large companies will never be able to implement a truly individual approach to customers. The task of such companies in customer support is to minimize the time spent on communication with users. But after all, quality service cannot be minimized. A sincere desire to help and personal attention to each client is the key to the success of a startup who wants to occupy a small niche in the market, where a monopoly has long been established. Thus, according to Kevin Hale , co-founder of Wufoo , at the initial stage of development of his company, he and his entire team of ten people sent letters to their users every Friday by mail, written manually by them personally. Even Microsoft cannot afford it!
“The only time that we received a real letter from the company was a letter from Google with a password, when we registered 2Polyglot with Google Business. In addition, it was printed, ” said the founder of the startup Andrei Prudko.
What NOT to do to a startup to win for itself a niche from the company monopoly?
Four whales that a startup must stand on in order to effectively compete with a monopolist company:
This concept belongs to Sam Altman , president of the Y Combinator startup incubator.
Obviously, an idea should in no case be a clone of a product or service that a monopolist company already owns. “If we are talking about business clones, the key idea of which can be described using insignificant differences, such as improved design or orientation of some kind of wine as an audience for your product, then such businesses are often not competitive ,” says Sam in his lecture for students of Stanford University.
Based on the above, the key to survival in the face of a startup’s rivalry with a monopolist company lies in taking full advantage of the novice project and in choosing the optimal niche in the extensive, previously busy market.
Any start-up, before starting to implement his own Barbarossa plan to conquer the market with the help of his innovative idea, should certainly study the springboard and ask himself the question: isn’t someone already doing the same thing? And if so, how can I do it better / better / faster / cheaper? (Underline whatever applicable). And if you have the answer to this question, then you are practically in a dam.
But the key word in this case is “practically.” After all, there are cases when there is already a huge company in the market, which you plan to occupy at least partially, which has a fairly good reputation.
')
Does this mean that you should forget about your idea and state the complete defeat of the Barbarossa plan, which was not even destined to begin to be implemented? “Not at all, no,” says Andrei Prudko, founder of the international freelancing platform for language professionals 2Polyglot.com , “We were not afraid to enter a market where there already exists a distinct leader. The main thing to remember is that you should not go into a frontal attack with a company that is many times larger than yours. When a monopolist controls the entire market, this does not mean that he fully controls all the individual niches in this market. And this is the key to the success of a startup in such a situation. If there is no unoccupied market, you can always create one yourself . ”
If we talk about the international freelancing market as a whole, then we can say with confidence that it is completely monopolized. And in the case of objections - as PayPal co-founder Peter Thiel spoke in his lecture for Stanford University: “There are two biggest lies in the competition: the monopolists claim that there are many more companies in the market besides them and that they are in a highly competitive market , and non-monopolistic companies assert that they own a monopoly . ”
Freelance market then and now
Number of freelancers by region
According to a McKinsey study, back in 2012 there were 30 million freelancers in the world, and by 2025 this figure would increase to 3 billion people.
In 2013, the number of freelancers in Europe increased by 45% from 6.2 million to 8.9 million people compared with 2004.
According to Forbes , in July 2014, freelancers and temporary employees in the United States accounted for about 15% of the country's total workforce, and it was predicted that by 2020 freelancers alone would be up to 16% of the total labor market. In October 2014, Upwork published data that there are 53 million freelancers in the United States, which already accounts for about 34% of America’s workforce. In 2015, the number of independent specialists increased by another 700 thousand, of which 60% began to earn more after leaving a permanent job. As can be seen from these studies, the international freelance market is growing faster than forecasts can be published.
It was from this cake that they decided to cut off their piece in the team of the Ukrainian start-up Polyglot and chose it to their liking: freelancing services for specialists of only the language sphere (translation of texts and speech, copywriting, tutoring of foreign languages).
“If a person needs shoes, he will prefer to go to a big shoe store, rather than go to the mall, where, for sure, they also sell shoes. Similarly, with the services of freelancers: if you need a translation of the text or writing text in any language, then most likely will choose a specialized freelance platform , ”says the founder Andrei Prudko.
Advantages of a startup over a monopolist company
It would seem that there can be no strengths compared to a huge company with a startup. How can a small and little-known project withstand an experienced and famous company? What are the secret advantages? - Just that he is small and little-known.
Advantage # 1. Little known
Low brand awareness of a startup allows it to experiment more often. For a beginner project, there is more than a base for maneuvers, in contrast to corporations, which themselves limit their circle of actions due to their size and the presence of a wide audience that they cannot throw, saying: “Sorry, we have a pivot”. The possibilities of experimenting with the functionality and design of large companies are very limited, because the slightest mistake on their part will be inflated by the media beyond recognition, which can harm the business. Almost everyone loyally treats startups: investors, media, venture funds and even their own audience.
Advantage number 2. Little
“Well, there are definitely no advantages here,” you think. Perhaps even to quote the ancient Roman poet Ovid: “A small state cannot compete with a large one; a small army cannot compete with a large one; a weak army cannot compete with a strong one . ” But you still make a mistake. Do you know what the biggest problem of large companies? “Despite a well-coordinated management mechanism, extended customer support and, possibly, a 100-person own call-center, large companies will never be able to implement a truly individual approach to customers. The task of such companies in customer support is to minimize the time spent on communication with users. But after all, quality service cannot be minimized. A sincere desire to help and personal attention to each client is the key to the success of a startup who wants to occupy a small niche in the market, where a monopoly has long been established. Thus, according to Kevin Hale , co-founder of Wufoo , at the initial stage of development of his company, he and his entire team of ten people sent letters to their users every Friday by mail, written manually by them personally. Even Microsoft cannot afford it!
“The only time that we received a real letter from the company was a letter from Google with a password, when we registered 2Polyglot with Google Business. In addition, it was printed, ” said the founder of the startup Andrei Prudko.
What NOT to do to a startup to win for itself a niche from the company monopoly?
- Do not create a “small” copy of a monopolistic company;
- Do not try to take away the whole “pie” from the monopolist company;
- Do not justify their intentions to take away the whole “pie” from the company of the monopolist with an improved design or cool “features”;
- Do not ignore customer complaints and appeals.
Four whales that a startup must stand on in order to effectively compete with a monopolist company:
- Idea
- Product
- Team
- Implementation
This concept belongs to Sam Altman , president of the Y Combinator startup incubator.
Obviously, an idea should in no case be a clone of a product or service that a monopolist company already owns. “If we are talking about business clones, the key idea of which can be described using insignificant differences, such as improved design or orientation of some kind of wine as an audience for your product, then such businesses are often not competitive ,” says Sam in his lecture for students of Stanford University.
Based on the above, the key to survival in the face of a startup’s rivalry with a monopolist company lies in taking full advantage of the novice project and in choosing the optimal niche in the extensive, previously busy market.
Source: https://habr.com/ru/post/298038/
All Articles