David Vs. Goliath
Don’t underestimate the underdog
About 7 months ago, I joined an early stage startup called Oyster. For those of you who don’t know about it, our mission is to create the best reading experience out there. Just as Netflix did for movies and TV shows, with Oyster, you pay $9.95/month to get access to over 100,000 books.
Needless to say, I decided to join them because I was very impressed with the team, vision and product during my interview process. However, when I discussed my career move with my friends, the first thing that they brought up was how easy it would be for Amazon to get into the e-book subscription business and crush startups like Oyster.
While public companies like Amazon have their own advantages — deep pockets, an established brand and the ability to build at scale — there are intrinsic values that being small offers which large companies cannot compete with. The last decade itself is speckled with numerous examples of David conquering Goliath.
In 11th century B.C, the Philistines and the Israeli Army met for war in the beautiful valley of Shefala, Israel. The two armies sat on either side of the valley for 40 days refusing to compromise their position. To break the deadlock, they decided to settle the battle via single combat.
The Philistines sent down a 6'9'’ terrifying giant, Goliath, as their champion. As everyone else was afraid, the King Saul was forced to let David, a young shepherd boy, be the champion for the Israeli army.
It was David who was brave enough to challenge the mighty Goliath. It was David who went on to defeat him with a stone and his sling. It was David who went on to become the next King of Israel.
Back in 2007, when I was a freshman at Carnegie Mellon University, I remember seeing the Facebook booth at a career fair. Even though all of us used Facebook, most of my friends were of the opinion that it was just a fad; it would get crushed once Google got into the social space. It took 8 years for Google to launch Google+ and Facebook, in the meantime, grew to become a public company worth over a 150+ billion dollars.
In December 2009, Drew Houston and Arash Ferdowsi turned down a 9 figure acquisition offer from Apple. Steve Jobs apparently even threatened them by saying that Apple would launch a competing product and crush Dropbox if they did not accept the deal. Apple did go on to launch iCloud 2 years later. Dropbox, in the meantime, kept building their product, team and company; they will probably IPO later this year.
In 2008, Twitter also received a a similar “sell to us or we’ll clone your product” from Mark Zuckerberg. True to his word, Facebook did produce a Twitter clone via its subscribe feature — 2 years after the threat was issued. Twitter, meanwhile, continued to scale their user base and iterate on their product. They are now a public company worth over 40B dollars.
You can call these events exceptions to the rule or anomalies. However, each of these companies went on to become enormously successful despite receiving threats from Goliaths in the industry. If you look carefully, you will notice some similarities between all these stories — advantages that these companies have that large companies cannot compete with:
- Laser-like focus: Most startups (the good ones anyway) focus on a core product and they bet the farm on it. They go on to develop other features to elevate that product but the core product remains the same.
A larger company (almost always) focuses on multiple different projects. Needless to say, it is difficult to beat someone when you don’t give them your full attention.
- Keeping it lean: At early stage startups, there is far less process and bureaucracy. Early employees are more greatly empowered which in turn leads them to work harder and think creatively.
If you hire correctly and create the right entrepreneurial culture, having a passionate, driven team can accomplish a lot more than a much larger team bogged down by process and bureaucracy.
- The sticky-ness factor: Sticky-ness (in startup jargon) is what keeps users coming back after they initially signed up for it. Once Google came out with Google+, I was not the least bit tempted to switch over — all my friends, photos, comments and posts from 2006 were on Facebook. Irrespective of how good a job someone does in cloning Facebook (and Google did a great job), they would never have access to this data. Why would I ever want to switch?
I can’t tell you exactly where Oyster is going to be in 5 years. I realize that the eBooks industry currently has a clear leader in Amazon. However, I also know that we have a smart, ambitious team trying to create the best reading experience out there. I don’t see a reason why we won’t be yet another example of David overcoming Goliath.
If you are thinking of starting your own company or joining a really early stage startup, I urge you to not make your decision fearing what the competition would do to crush you . Rather, make your decision based on the company mission, the team, your own ability and the opportunity you are chasing. Whatever your goals are, the ability to achieve them lies with you — not with your competition.