WWDC2014: When Giants Step, Startups Can Get Crushed
Hitching a ride on the coattails of a winning company can be a great strategy for a startup. You can fill a market gap by looking for the holes left by a groundbreaker.
Apple and its massive ecosystem is an example. It's the reason why so many startups watch the company's annual WWDC, Worldwide Developers Conference. But there's a danger in hitching to someone else's star if the big company decides that what you offer would be the perfect addition to their products and services.
WWDC was a clear example of the tightrope that entrepreneurs walk. Gizmodo's headline was a perfect encapsulation of the problem: Everything Apple Tried to Kill Today at WWDC. This list is thought-provoking:
- Dropbox--With improvements in iCloud, Apple has integrated cloud storage far more into iOS and Mac OS, which means less need for Dropbox, Microsoft OneDrive, Box.net, and the like. Although Apple has support for Windows, it doesn't for Linux, so there is still room for some of the third party products. But, basically, Apple has given tens of millions, if not hundreds of millions, an excuse to get rid of extra software.
- Skitch--The annotation tool from Evernote now faces Apple's Markup tool in email. Again, they're not exactly the same, but close enough that people who want to use fewer products could do what they need to.
- Hightail--Formerly called YouSendIt, Hightail and other transfer methods for sending files too large to go through email face Apple's Mail Drop feature.
- WhatsApp/GroupMe--These and other messaging systems that can handle group messaging are challenged by improvements in iMessage.
- Shazam--If you want an app to recognize music, you may not need Shazam or SoundHound as Siri can provide the function.
- Next--The entire home automation category is in danger with Apple's newly admitted interest in running everything in your life, including locking doors and turning lights on and off.
There is nothing unusual in what Apple has done.
When I was in the software retailing business many years ago, independent vendors would regularly complain about how Microsoft was grabbing their ideas, integrating them into its operating system, and taking their markets away. Google has done the same thing, as a similarly worded Gizmodo headline said about a year ago.
This is due to the normal dynamics of business. A company has a hit product, creates an ecosystem to further drive demand, but eventually wants to keep selling upgrades, which can mean constantly adding features. At least some of those will walk over the toes of partners that had created software to enable these very abilities. Often, the third party will be the one with an original idea and the giant will simply copy it.
You cannot get away from it, no matter what era you work in or your industry. Come up with a great add-on for an electric saw and you can be sure that the saw manufacturers will consider whether copying your innovation makes economic sense for them.
Maybe you'll ride on someone's coattails. But never take the propulsion for granted. You should always consider the long-term viability of your company and ideas and when it makes sense to sell out, or even drop out, and pursue another idea.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.