Why disruption can happen in any market — the case of DuckDuckGo
The misconception in product management is that fierce competition or one with seemingly high barriers to entry cannot be disrupted. This is a myth and we’re going to talk about the product company DuckDuckGo to prove it.
For those that don’t know, DuckDuckGo is a search engine, just like Google. However, unlike Google, DuckDuckGo doesn’t track your every move and sell that data to the highest bidder having you followed wherever you leave a digital footprint around the web. Combine that with privacy and user data bordering on the verge of crisis mode today, DuckDuckGo is well positioned to perform well into the future.
So we know that DuckDuckGo successfully broke into a market that was all but won by a dominant player. Our first question is probably how did they do it? However, the second should be, what can we learn from them to enable our product businesses to be successful as well? Good news for you, is that we’re going to answer both.
DuckDuckGo broke into a market that was all but won by designing their value proposition around the exact opposite of their largest competitor’s main revenue generator — they won’t track you. Google needs to track you. It’s by far their largest source of revenue for the whole company — you. Your data, what you do on the web, the things you want to buy, etc. They take this data and sell it to those that sell the stuff you are thinking about buying so they can put ads in front of you wherever you go. As their technology improves over time, the ads get creepier. You were just searching for those shoes, how did they wind up on this site?? Why does every site I visit know that I want to travel to Europe?? The voice from the market is getting louder and louder — that’s creepy! This is the problem DuckDuckGo solves and this problem just so happens to be the only problem Google can’t solve. It’s brilliant!
I’m sure some of you are wondering — well that’s great and all, but if DuckDuckGo isn’t collecting all that creepy data then how do they make money? This is an excellent question. The short answer is in a very similar way. Just like Google, DuckDuckGo makes money by selling ads; however, the key difference is the ads you are shown are not based on your previous search history (remember no tracking). Instead, they are based on what you are actively searching for. Make sense? Why wouldn’t I want to see ads for stuff I want while I’m searching for that stuff? DuckDuckGo realizes that there’s plenty of opportunity to make revenue without taking the game to a much creepier level.
So now that we know how they did it, how can we learn from their strategy to help make our product company successful? This is where your market research pays off and in particular — the competitor evaluation. You need to understand everything about your competition because if you don’t you are likely to repeat their mistakes or worse. DuckDuckGo knew it would be foolish to try and beat the 800-pound gorilla at their own game. Other companies with great resources tried and failed (I’m looking your way, Yahoo). Instead, they listened to what the market needed and then chose the problem that their competitors couldn’t solve. There’s no reason your product company can’t do the same. Keep this in mind when you’re evaluating the competition. What problems are big (and getting bigger) AND are also problems that your competitors are either ignoring or simply cannot solve based on who they’ve decided to become. It’s a brilliant strategy and one that, if done right, can lead to tremendous success.
If anyone tells you not to build a product in an industry with lots of competition, take that advice for what it’s worth — not much. Competition is a great thing. It means there’s already market validation for those products. Focus instead on the obvious unmet needs of that market and how current products either ignore those problems or come up short. This is the information you actually need to build a great product business.