It was one of the most honest panels that I’ve heard in a long time. I was a bit celeb-struck to be in the same room and shake hands with these folks (gotta love bschool!)
The things that I took away from it was their take (which they all agreed on) on why you don’t have to worry about big companies crushing you as one would (and who will/can), and Bob’s 3 lessons to be successful.
Why you stand a chance to big companies.
A very common question that get asked (and thanks to my good friend Adam McKean for asking it) is, as a start-up, how do think about big companies in your category “turning on the switch” to do exactly what you are and crushing you? I wrote a similar post a while ago about this. And Bob, Joe, and Justin confirmed what I had thought.
- It’s hard to kill the incumbent because of network effects. If the startup has scaled its users, it will be hard for the “Googles” to unseat it.
- When a large company is thinking about building a new product, they’re not likely to take their best engineer or product person from a highly profitable business and have them tinker with a start-up idea. They do quite the opposite. In a start-up however, you find the best and most passionate people slaving away day and night at making the perfect product.
- When it comes to the question of make or buy, they will likely consider buying first. When the big guys are thinking about something, they reach out to the incumbents first and at least get a conversation going. By the time that they decide to build it themselves, secure the right resources, go through the hierarchy of an organization to get it done, the small, nimble incumbent probably has already gained a decent amount of users. It’s a function of how quickly these businesses are adopted by users and the strength of the network effects.
- Danger Zone: your largest threat isn’t from a large company - it’s from another startup. The Danger Zone is when you get noticed until when you’re big enough that everyone pays attention. During this time is when other geniuses get a whiff and set out to build something better and take your users with them.
Bob’s lessons on being a successful innovator (man definitely has authority on this topic).
1) Ignore conventional wisdom: Conventional wisdom is what keeps status quo. It’s the job of the innovator’s to defy it.
2) Listen to dissenters: This is going to be how you will get to the right answer. JFK said that he was going to send someone to the moon. The dissenters were quite vocal. They used the dissenting voice to write the roadmap and eventually sent someone to the moon.
3) Tolerate and expect mistakes: Make decisions quickly. Mistakes are by-products of innovation. Collect just enough information - the longer you study something, the worse your decisions will be. Keep trying options until something works.
4) Convenience always wins: A product or service that’s 1-step more convenient than the closest competitor will win. Be the first-mover and create a strong brand around it.
5) Self-doubters make good business people: Don’t fall in love with your ideas. Always question yourself.