Victus Spiritus


Why startups work, doing so much with so little is impossible to predict

09 Jan 2010

Incremental Developments from BigCo - *yawn*

No one gets surprised by BigCo's "latest revolutionary" product or service announcement in that company's market space. Excess success breeds sloth. We all line up and pretend to be amazed by what was accomplished with massive R&D and marketing budgets. The reality never matches the hype balloon.

Deep down we know that BigCo isn't going to disrupt or redefine its own market. Talk about biting the hand that feeds you. That's like Google disrupting search and shrinking the net advertising market by 70%. Can you imagine a company so driven by optimization that it would shrink its own revenue stream?

Enter the startup, the Story of the Underdog

The defining aspect of a killer startup is a miniscule amount of resources leveraged in just the right direction to uncover unprecedented user value. Now that's a story worth listening to. The founders have no concern for vastly shrinking a bloated market, into a much smaller one. The difference between making $10 million, $100 million, or $1 billion dollars profit is meaningless to a couple of founders who are subsisting off of Stove Top stuffing (please don't do this, there's no nutrition in those salted breadcrumbs).

Startups are a form of independent review that keeps BigCo honest about providing real value to it's users. As the gulf between user need and service swells, the opportunity for startup disruption grows.

Another unmatched asset of startups is their ability to use the best of every service available right now. An unknown startup can freely sign up for most services and not put much of a burden on another developing architecture. In fact, when done right two complementary startups can pull eachother up, increasing market size and user value.

BigCo can't freely leverage all the cutting edge APIs and services. They have to pay for the privelege by buying the startup or paying a hefty premium for access to the service. Their resource needs could cripple a smaller company. In addition, a gamble on a service that get's bought by competition or dissolves, leaves BigCos users left out in the cold. Because of their large user base, BigCo becomes less agile, inevitably this leads to obsolescence. The industrial advantages of size, are becoming hindrances in the new digital economy.

The less rigid a business structure, the greater it's ability to flow.

Modularizing Business

I'll finish up this post with a novel business structure which supports open interoperability for all involved. Admittedly, it's a little beyond today's corporate system.

Imagine businesses that competed to scale your business. Other companies would compete to maintain a given service. By breaking up the needs of startups, there would be no need to waste resources reinventing known solutions or technologies. Competing companies would have optimized the space.

Unfortunately the solution is often tied to the specific problem space (and data usage). The better we can decouple the data accessibility from our services, the more modular new tech businesses can become. No business woud be fully locked into any piece of it's integrated architecture. The flip side of this design is that all businesses would be susceptible to the same systematic vulnerabilities, in the case that everyone relies on a single (best) provider, or method.