What startups lack in strength, they make up for in speed, adaptability, and a lean nature that is perfect for innovation and disruption.
People often use fish and pond metaphors to explain business dynamics. The big fish are influential and powerful market leaders with plenty of resources to drive their business forward. Small fish, on the other hand, are adaptable and lean; What they lack in power, they make up for in speed and flexibility.
Big fish versus small fish is a perfect analogy to describe why it seems like large corporations are stagnant compared to startups. Why, for example, in the social media space, TikTok broke all records in 2021, while Facebook, Instagram and the rest of the Meta process lagged behind.
One of the biggest anxieties of new entrepreneurs is thinking about the possibility of their product competing with technology giants. But what if I told you that being the little fish in the giant pond has its advantages?
When size weighs you down
Jack and the Beanstalk, Brave little Taylor or David and Goliath. The classic story of the underdog who faces an insurmountable threat and rises triumphantly is part of Western popular psychology. Something about these stories rings deep. We identify with the feeling of helplessness when faced with overwhelming adversity.
For many startups, this is exactly the feeling their founders experience when they realize that their ideas will compete with established competitors, including giants like Meta or Google. But there is another side to these stories: the hero wins not because of his strength or brute strength, but because of his intelligence. The lesson is that strength is more than muscle and hides where you least expect it.
All it takes is a small change in perspective. Being the smallest fish in the lake brings many advantages, it's a matter of understanding what these advantages are and how to best exploit them.
Case in point, Meta, when it was called Facebook, lost over $6 billion due to a six-hour outage of all its services . Even the Oculus user base couldn't use their devices because they couldn't log in to Facebook.
For a tech giant with engagement-based products, a six-hour outage is nothing short of a catastrophe. The same cannot be said for small businesses, as operating costs vary on very different scales. The risk and loss related to the same type of outage are miniscule in comparison.
The key word here is scale, as the saying goes, the bigger they are, the harder they fall. Mistakes cost money and bigger mistakes cost more money. As such, it is natural for large companies, especially those that have to answer to investors, to become risk averse.
There's a reason I focused so much on social media examples. Instagram started out as a small-scale social media that was bought by Facebook, just like WhatsApp. These were products that started small, tried something different, and ended up exploding in popularity and scope.
They are now synonymous with Meta, but this was not always the case. Someone had to take the first step and launch the product, someone had to take the risk, and small businesses have less to lose and more to gain by trying to innovate. This is why small fish keep up with technological disruption.
What is technological disruption?
In business theory, disruptive innovation is an innovation that makes the market evolve in new ways, whether through the creation of new creators, the addition of new value to a current market or the displacement of current trends, products and alliances.
Keep in mind that disruption is a process, not a product or service. For example, YouTube was a source of disruptive innovation as it essentially laid the foundation for video streaming via web browsers and community-based video sharing.
YouTube itself is not the disruption, but rather the effects it has had on the market. Other companies realized what they were doing and realized the potential of web streaming, and even adjacent markets like hardware companies realized that there was a growing market for professional, yet affordable recording equipment.
Disruption is not something that just happens within the mainstream, it is what happens when someone breaks from the mainstream and introduces something different. Even the smallest change can have far-reaching consequences.
Smaller companies don't have to convince their investors of the potential success of a new idea, they don't have to answer to a CFO or obtain approvals. This translates into adaptability and flexibility, it's that Silicon Valley dream of five developers in a garage with total creative control over their work.
That's not to say startups don't need to tread carefully. Intelligent decision making is a key factor in the success of new businesses. But in contrast to larger fish, they have more room for maneuver, adapt better to changing markets and have more to gain from disrupting their environment.
The comfort of stagnation
People don't like change. We may think so, but when we get used to something it is very difficult to leave our comfort zone. This is something established products know all too well: the larger your audience, the harder it is to change the look or experience of your product without facing backlash.
There are two reasons for this: first, your presentation and experience slowly become part of your identity. For example, the 140 characters per tweet started as a way to mitigate data transfer, but quickly grew to become part of Twitter culture, to the point that the 280 character update was met with backlash.
The second reason is that the bigger you are, the more attention your products attract, which in turn means more scrutiny. It's very difficult to create something new that works as expected from the beginning, bugs are part of the process, but if you are big enough, all the tech blogs will talk about your mistake.
This is why many companies prefer everything that has already been tried and tested, rather than trying to innovate. Social media is a perfect example: almost every service started implementing their own version of Instagram Stories as soon as they realized how popular they were.
As a small fish, trying to go up against the big fish on equal terms is a death sentence. They have the resources and strength to knock you out of the competition. Smart startups understand this and instead play dirty, finding niches that are not covered by conventional solutions.
Ironically, being small means these fish may be at greater risk. If you want to see what will revolutionize the technology industry next, don't look at the major competitors, look at the little ones on the margins, look at the Ubers, the Snapchats and the Airbnbs, which have grown from small experiments to global phenomenons.
Source: BairesDev
