How Startups Can Compete Against Google

by mike on February 10, 2010

Google launched its new social experiment called Buzz yesterday. It has been labeled a Twitter and Foursquare killer by some, and lame and boring by others. Most of the launch was media hype, but it got me thinking about how startups must feel when they see new product announcements by Google. Google is one of the few companies that’s constantly acquiring (59 companies) and launching new products. So, what do you do if you are a startup and Google releases a product that goes after your core business?

This sounds silly, but first try not to freak out. It’s doubtful that Google is targeting your business specifically and it’s not a zero sum game. Now, if you are Twitter or Foursquare that’s a different story. Twitter in particular is an interesting case to look at. There are low technology barriers to entry in its market, but Twitter has significant demand competitive advantages (one of the 3 sustainable according to Greenwald) in the form of customer captivity and network effects. I came across recent research that put Twitter at the 1B tweets per month level, 16X growth over the prior year, in January 2010. That’s a great head start against Buzz, but with Google’s distribution engine it’s going to be worth watching how this plays out.

In general, startups should play to their strengths so here are a few things to think about:

Be nimble. Google is a large corporation with thousands of employees across the globe. With that size comes processes, procedures and other “big company-isms.” Some would argue Google is even on Microsoft’s path to creative destruction. As a startup, you don’t have the resources (e.g. R&D, sales/marketing) and associated cost structure that Google has. You are lean and mean. You can innovate at the drop of a dime and release new code many times in a single day. You can get customer feedback early and often. You can also change direction or pivot if you need to. That’s a huge advantage in itself. Big companies have an incredibly hard time shifting direction after sinking considerable time and money into something — trust me I know, I started my career off at one.

Intense focus. Last time I checked I didn’t find many companies with as grand a plan as Google’s — search, email, smb, maps, video, shopping, blogging and mobile. It’s incredibly hard to be number one in all of your markets when you have such a broad focus. Be the opposite of Google. Focus on your core business and be the best at what you do. Hopefully, your market is big enough to build a sustainable business. Build credibility in your niche and then expand.

Be disruptive. Google is a strong company because it has disruptive roots. It’s business model was incredibly disruptive. It had great core search technology, but didn’t create a new market or category. There were plenty of other search engines before Google. If you create a disruptive technology and/or business model you can compete with anyone. Disruption changes the rules of the game. Easier said than done, but aim for it.

What would you do?

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