The Threat

The existential threat to your organization from leveraged technology and the solo entrepreneur.

We are entering an economic shift where the solo entrepreneur or micro business will be able to compete with mid to large sized organizations, by using a combination of outsourcing and online technology tools.

This post is part one of a story, continued on LinkedIn.

A new generation is busily learning these tools, which will turn their tiny new businesses into an asymmetric threat in your market niche. Mastery of these tools will make it impossible for you to compete with them in the future, unless you take steps to prepare your organization. Disruption is the operative word and tactic of the upcoming entrepreneur and while disrupting an existing business model can be great news for the consumer, it presents a serious threat to those whose livelihood is being disrupted.

Your new competitors will need only to understand your market niche to assemble the virtual team needed to compete with your established business. As newer generations learn how to exploit these tools, EVERY established business is at risk. It is simply a matter of time before someone from this generation decides that your niche is worth pursuing.

If you've been paying attention to Small Business for the last ten years, you are no doubt aware of what solo entrepreneurs and start-ups with minimal funding have been able to achieve. Although their core product or service holds some interest to us, it is not what is threatening your business.

Instead, consider the capabilities they exhibit outside their core product. They are somehow able to design, build, and market a product, then manage their finances with a small team, or even a single person. They have seemingly mastered the support tasks that every business must contend with, without employing (sometimes literally) a support team.

Now, ponder for a moment that their methods of conducting business grew not out of design and intent, but rather from necessity. With a shortage of both personnel and funding, they leveraged outsourcing and technology tools to perform classic business functions at little to no cost. In some cases, they even developed the technologies that were necessary to fill these roles. By attaining efficiencies that were inconceivable ten years ago, they have been able to compete with established businesses. Quite possibly, they could not have existed in the first place if not for these tools. Today’s solo entrepreneur has many online and outsourced tools available that would have required teams of people to emulate, as little as ten years ago. For the first time ever, if is now possible for a single person to access outsourcing and technology tools to:

  • Design a Product
  • Keep the Books
  • Find an Overseas Manufacturer
  • Ship to a Fulfillment Center
  • Market to Their Customer

The new solo entrepreneur (or solopreneur) is able to accomplish all of these tasks and more through use of a number of online resources. They are also able to create recurring revenue streams around an existing product without a single person to support it after the initial launch. Some of these online resources are:

……and the list goes on and on. When we add 3D scanning and printing, along with an easily accessible manufacturing base in China, the force multiplying effects are stunning. All of this can done from a single computer, without a warehouse or building full of highly paid overhead (a.k.a. employees), or even an office. It’s not difficult (but there is a learning curve), nor is it expensive. But running an online business is also not the subject of this article.

All these new techniques and services are used to support the solo entrepreneur’s core product, which more often than not, is something that did not previously exist in the marketplace. This presents a limited threat to existing businesses. But consider what would happen if the same techniques were used against your established business.

Imagine if one of these young geniuses of the tech industry were to use these techniques and target YOUR established business. Whether you sell a product or a service, would you know how to compete with the solo entrepreneur or small group who could match or surpass your existing resources?

There is already a trend of solopreneurs who provide marketing services, turning on their previous clients and manufacturing the very items they were helping to market. The last case I heard was of an Internet marketer that decided to offer his own line of lotions and scrubs because he figured that if the client had enough margin to hire him, it was a good business. Without having to pay someone to market his own products, the margins were even bigger. The design and manufacture of the product was the easy part!

The online tools are becoming increasingly sophisticated, yet easier to learn every day. Not every solopreneur will create the next Twitter. Most are going to start their business in existing industries and aim to disrupt them with agility, service, and creativity. These people may not have the imagination to create an original business, but they will understand the tools needed to crush yours. Imagine someone selling your core product or service, but without the expenses of payroll, marketing, or fulfillment. Imagine a single person managing multiple teams of designers, all working to create a product designed to beat you at your own game. These thoughts should keep the small business owner awake, but instead, most are still sleeping. Every established business, unless their core products are protected by a heavy patent portfolio, faces this threat. It is only a matter of time before these technology “guns” are trained on YOUR product or service. It may be hard to imagine that some group of young entrepreneurs would want to enter your business, let alone compete in it. However, you probably already have some competitor in your industry. What if THEY decide to adopt these leveraging technologies before you do……They only need to “get it” to start down the road of using these force multipliers to compete. As they scale up to crush you, you are now in the unenviable position of playing catch up.

The story of the start-up is often written around the product or the mission that directs them . Instead, maybe we should be asking these start-ups, what “tools” they used to gain the efficiencies that make them successful. Tim Ferriss talked about employing some of these tools in his landmark book, The Four Hour Workweek. In it, he proposes how one person can set up an income stream and then travel the world on the automated income. Great, but I think a lot of people miss one of the major conclusions that can be drawn from his work.

The Four Hour Workweek is, at its core, a book about leveraging technology to gain efficiency. Sure, the lone entrepreneur can use these technology tools to start an automated business and travel the world, but I almost wish he had left the secondary title off of the cover. The tools that Tim talks about can be used by any size company, to improve efficiency and become more competitive. Putting “Escape 9–5, live anywhere, and join the new rich” on the cover, makes it harder to get a CEO to read it. Maybe Tim will repackage it someday as “How to Leverage Technology and Employ Pareto’s Rule, to Quadruple your Competitive Advantage.” That would make it easier to sell the idea to upper management!

You might be thinking, “Why can’t we do this right now and make our company unassailable in our niche? Why can’t we teach some of our own employees, to use the solo entrepreneur’s tools as force multipliers? Why can’t we harden our organization to the threat, before it materializes”?

A first step in preparation might be to allocate the responsibilities of, or create the position of (in the case of a larger organization), a Chief Technology Officer. To use recognized corporate titles, the CTO is responsible for the dissemination of technology through the corporation and products. It is their responsibility to stay current on the leveraging technologies, but more importantly, to train employees in their uses. Ideally, this would be someone that you already have, who understands the technologies and how they can be used in your business, to improve employee and corporate effectiveness. This person could even be the hobby-entrepreneur that is already lurking in your organization. This “intrapreneur” can be used to excite the other employees to adopt and learn new tools. In lieu of an actual CTO, there are also companies like, who specialize in training your existing workforce to respond to asymmetric threats from these technologies.

Is it possible to change the culture of an established organization, so that they can compete with the modern startup and their technological tools? Certainly it is possible, but the older the company is, the more set they tend to be in their ways. A lot depends on how effective this intrapreneur/CTO is in “selling” the rest of company on the idea that the threat is real and imminent.

They must also be able to explain the technologies and provide a frame of reference, to those who may not have a technical background. Then, they must be able to persuade management and employees to act, in order to save their company and their jobs.

—-see my Post on LinkedIn for ways to respond to The Threat

In addition to his day job, Darren Dawes runs a number of his own internet based businesses selling real products (not e-products) and consults for, a group dedicated to preparing established businesses to meet the threat posed by internet start-ups that target them. You will soon find him on as well as Twitter (@HankRearden67).

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