Startups come in many different sizes but across the board, they often face tough competition with bigger corporations. It's not easy to compete with multibillion dollar businesses with thousands of employees and millions to spend on marketing. There are, however, a number of advantages of being a new startup of any size, or one in a new space. Here are five tips that have helped our team at 42 Technologies compete with big corporations.
Utilize Your Freedom
As Jason Cohen says, a profitable revenue stream is a prison. Big companies are locked in by the profit targets they have to reach every quarter, making it difficult for them to compete on price. But as a startup, we had the ability to utilize lighter cost structures and price competitively. Because we are a full SaaS model, there's low capital expenditure to go with 42. Customers can sign up for a subscription and not pay millions up front for a long term contract. As a result, we were able to sign on large retailers and get them setup in a matter of weeks, instead of going through months of negotiation. There were fewer situations of "this is what we could do" and a lot more of iterating quickly and adapting to what's actually helpful for the customer.
Minimize Political and Bureaucratic Roadblocks
I know from experience that company politics and conflicting interests can block a quality product from entering the market successfully. At 42, our customers will always be our #1 focus. Our whole team understands this goal, which is why it's possible for us to make changes to our products in two days rather than six months. This is a clear advantage over bigger organizations with complicated employment structures. Use your status as a new or small company to get the team on the same page and preemptively avoid politics in your workplace.
Use New Technology to Iterate and Improve Quickly
Every year we see the rate of technological development grow exponentially. Working with technology that was implemented years ago means inefficiencies that cost millions of dollars. Traditional software often locks customers into slow change and costly support for long periods of time. As a newer company, we can start with a blank slate. We utilize amazing tools like Spark to build a data processing platform that's more than 30x faster and better than current solutions. We also have two-week iteration cycles which allow us to constantly evaluate how we can improve.
Build Long-Standing Relationships
The larger the company, the more likely you are to stumble upon a corporate structure that prioritizes dollar signs over people. We're focused on solving real problems for real people and reducing the stress that comes from hours of manual Excel work. If you care about the details of what you do and people know it, you're automatically ahead of the big brand pack. 42 is not built on the traditional consulting and maintenance model, which requires you to pay every time you want a change or improvement. Instead, we have an open channel of communication, where we talk to our customers everyday, and if they want something, we'll implement it in days or even hours. An honest feedback loop is crucial to the relationship, because customers know that they can tell us exactly what they want and not be charged for each request. This type of relationship ultimately helps everyone, because it leads to a better product and more satisfied customers.
Think about the origins of Amazon and Netflix. They began as small startups in entrenched spaces with no brand, vendor relationships, or distribution. Through a determined focus on the customer and the courage to innovate, they redefined saturated traditional industries and are now leaders in their spaces. There are plenty of ways for startups to compete with big corporations. Consider implementing these tips and brainstorming others in order to differentiate yourself from the big bunch.
About the Author
Cathy is the CEO of 42 Technologies, a big data company for retailers. 42's intuitive platform distills complex data into actionable recommendations to help brands find new ways to grow. 42 is backed by Y Combinator, and has presented on stage at New York Fashion Week, TechCrunch Disrupt NYC, and Decoded Fashion in Milan.
Prior to founding 42, Cathy worked at Procter & Gamble on the billion dollar brand Olay, where she specialized in growth strategy and data analytics