Larger companies: what they have over “small fries”

Small companies typically have one advantage over larger: speed to market. Everybody is rowing a small ship, the same direction, at the same time. The mission is clear, the goals are well understood and embraced and the lack of a “matrix organization” benefits everybody with a linear, shared top down command like structure. However, if one side (product, marketing, engineering, biz dev) starts to slack off, the boat, like a kayak floating downstream, will only spin in circles and eventually lose the race. Most consumer opportunities with software are races, at the start, sprints to get the first product, the first spin, the first claim to leadership in the space. The second half of the race, after the hockey stick, is when you’re no longer the underdog, you’ve crossed the chasm (Geoffry Moore), you’ve vaulted over the Dip (Set Godin) and you start to be perceived as the “one to beat” in the space.

Can you imagine a small company succeeding when a mission critical team member decides to raid the company’s most valuable assets?

(Pause) Neither can I. Generally speaking, biz dev relationships aren’t portable, neither are marketing strategies for a given company, especially one who depends on search / social. However, a stack of code, a bit of functionality – that’s portable. If somebody decides to clone your feature set, and then says “well, everybody does it”….what is the company left with? Marketing, biz dev – but the product, the core thing that created the marketing opportunity, the viral loop – becomes worthless.  Can you imagine if Twitter co-founder Jack Dorsey, instead of launching square, had gone of and created sqrd – the way to instantly share what’s on your mind with your social network? Leveraging key pieces of twitter’s IP that were created as a result of the product, engineering and marketing teams to solve Twitter’s very specific problems?

This is where larger companies win, in a big way. Everybody is rowing together – sometimes against other team members, parts of the company or even divisions within the company. But, with each stroke of the oar, value is being created, locked up in a vault that we usually refer to as “company assets” or ways of doing things. This library of best practices, code, methodology and relationships builds as every team member contributes – even if it’s no more than a single line of code per day, or a single white paper per week – at scale, these things really add up. In an “intellectual race” it’s easier to build that vault of competitive advantage in a larger team, even if the individual contributions, for want of scale, meetings and a slow turning wheel – are smaller than they might be in some fast paced startups, where meetings occur less frequently and the problems are boiled down to their essence.

So if you do end up in a larger context, where the mission is big, the team is large and the matrix can be confusing, just remember: even if a small, fast paced startup beats you in a sprint, if they get bigger, they’re going to slow down, by their very nature and run the marathon against you. If the large, established team can build, leverage and evangelize that stack of intellectual property, expertise and shared vision, then even the swiftest startup will never be able to catch up.