It’s time to realize you’re already competing with Amazon, Google, Facebook, Apple
As the Big 4 —Apple, Google, Amazon, Facebook— fight to become the first trillion-dollar company, they are rapidly expanding into unexpected new markets and increasingly competing with all entrepreneurs in some form or other.
The Big 4 are no longer lean, disruptive companies — they are monopolies that fundamentally control most of the tech space. As the importance of voice recognition, AI, AR, VR increases, the investments they’ve each made into those areas will make it even clearer that they control the power.
Strategically, this means a major shift must happen in the minds of business leaders and Startups: build a resilient company that can sustain direct competition from one of the Big 4, or identify the best path to partnering and/or being acquired.
As Snapchat quickly learned, being different can be the key to building your business. Unfortunately, not being different enough means Facebook will copy you and kill your adoption.
We are in a time of monopoly super powers
For every announcement likeAmazon acquiring Whole Foods ($13.7B), there is speculation of more potential deals that spread Amazon’s reach — rumours are that next Jeff Beszos & Amazon may target workplace communication platform Slack to expand business and enterprise offerings.
Additionally, other CPG (Consumer Packaged Goods) and Retail giants are considering joining Amazon, rather than fight them, for a piece of the online retail pie. This includes IKEA, Nike, Dish Network — and the partnership makes sense because Amazon has mastered online shopping in a way most brands can’t.
Facebook has been on a similar land-grab campaign with the intention of controlling how we communicate with each other. Thanks to acquisitions and new products Facebook, Messenger, Instagram, WhatsApp have more than 4 billion users and are 4 of the 6 most downloaded apps in the world!
Working with or against the Big 4
For every Oculus Rift ($2B acquisition by Facebook) there is a Meerkat (live stream app) and Hipstamatic (photo sharing app) that were forced out of their markets once Amazon and Facebook entered their market through the acquisitions of Twitch and Instagram (and Facebook Live and Periscope by Twitter).
Just like countless entrepreneurs are selling the dream of 6 figure incomes with Amazon FBA (fulfill by Amazon), countless more businesses have been shuttered due to Amazon’s predatory pricing and even more FBA entrepreneurs have been forced out of their own market because of Amazon’s own competing products.
If you’re planning to work with or against the Big 4, we recommend you follow these rules:
#1: Learn who is friend and foe
Every entrepreneur assumes they don’t have much direct competition. However I’m sorry to tell you — if your vision falls into any of these categories, you will soon be facing huge competition (or opportunity):
- Transforming how we communicate (Facebook).
- Using data and technology to improve how we experience the world (Google).
- Delivering convenience to your every need (Amazon).
- Creating technology and experiences that make you feel premium (Apple).
Google has acquired more than 200 companies across a very wide set of sectors; including blogging, smart thermostats, travel, social gaming, smart watches.
Likewise, companies like Pebble/Fitbit, Sonos, Beats (acquired for $3B) quickly learned that Apple’s market desires now expanded into wearables and personal audio.
We’re entering an arms race now that every tech company has realized they are actually in the data and life hub industry. You can see the battle lines especially forming with AI acquisitions.
The key for entrepreneurs is to have a long-term vision for your products and imagine whether you’ll intersect against the Big 4 or can compliment them.
#2: Understand what you do exceptionally well
What makes serial entrepreneurs exceptional is often the greatest weakness: the selfish desires for their business. It pushes them to take bigger risks, to challenge assumptions, and to put in more time than is sane. It also can cloud their vision and judgement once a name brand enters the market.
In the case of positioning offering against the Big 4 it can lead to unrealistic expectations. Whenever my firm PH1 Media consults entrepreneurs about their product strategy and market opportunity, we have to start with simple questions to prepare them:
- If Google or Facebook started offering that service in one year, why would customers stay loyal to your product?
- If any of the Big 4 were to build a product for your industry, how would they go about it with unlimited resources?
- Is there a single product or service that you offer, which if someone else offered for free you would still be able to retain customers?
- When customers refer prospects or speak on social, what feature are they most often pointing to?
Earning your market share depends on the ecosystem you can create, but keeping it depends on doing one thing so exceptionally well that it is better for the Big 4 to partner or acquire you.
Slack, the workplace communication platform, is a great example of a product that opened a new market and turned a unique offering (chat especially made for workplaces) into a multi-billion dollar business despite competition. For three years they built partnerships with hundreds of tech companies, including Google. Fast-forward to today when Facebook and Microsoft have built products to go head-to-head. So far they have been unsuccessful at toppling the love Slack’s user base have for the product.
Understanding what you do exceptionally well allows your product to be more resilient to the Big 4 and to better leverage them for partnerships or acquisitions when the time comes.
#3: Nurture talent, build IP
The expansion of the Big 4 into industries no one could have imagined (Whole Foods and Beats) is a massive opportunity for entrepreneurs currently working in those areas today for big reasons:
- Brings attention, investment, and new ideas to use cases that may have lacked them. e.g. Facebook’s acquisition of Oculus put AR and VR on the radar of every investor in the country and investments surged accordingly (between 2014 and 2016 investments increased by 25x).
- Entry of the Big 4 means the entry of countless specialty resources —like machine learning, AI, integrations, frameworks, IoT technology— that will transform your grocery store visit into a hyper-personal and friction-less experience.
- Engineers get bored, even ones at the Big 4. They look for new challenges and want to solve big problems. Your small or medium venture may in fact be the challenge they innovate and will leave a ‘boring’ job at Facebook, Apple, etc to work on.
In both scenarios —remaining resilient against Big 4 competition, and positioning to be partner/acquisition— nurturing talent and building intellectual property (IP) will be critical to your success.
For resilient companies this is critical because hiring top talent and maintaining a competitive edge come down to the exciting mix of talent in-house, and because your product is a unique IP that will have longevity as your industry evolves.
For companies with a goal of being acquired the reality is simple: unless you have a special mix of talent and a refined product, they can build it themselves. Google in particular has a long track record of acquiring technologies that enhance and expand their current ecosystems. If you’re a data company that licenses another company’s feed and has a third-party processing it, you will not be a target. Likewise if your talent has built a product that isn’t secure, compliant, or scalable, then you will not be a target.
You might think it is far-fetched that they will enter your very niche market, but speak to vendors in the travel tech, location tech, ads, or home audio market to see how quickly things can change in the era of tech monopolies.
In your next vision and product planning sessions, picture a future where Apple, Facebook, Amazon, or Google are direct competition. Can you survive? Is your company built to be resilient? Is your product so spectacular in a few areas that you can last a Facebook-like assault on Snapchat?
The rise of smart/voice-activated speakers, artificial intelligence, machine learning, AR/VR, means that soon enough all tech companies will depend on the Big 4 even more than they can imagine.
You may not be in competition today but these questions may be the most important to challenge yourself and your team to rise to the challenge and continue innovating ahead of the competition.