A Survival Guide for Startups in the Era of Tech Giants

Startups and established companies all face a dilemma when building new technology products.  If they hit upon something innovative that has high potential, they invite the scrutiny of large technology companies such as Amazon, Google, Facebook, and Microsoft. Big Tech has the money, technology, data, and talent to replicate and enhance any technological innovation that is not fully protected by patents — which encompasses most digital products.

Recent episodes have shown this copycat behavior to be quite common and life-threatening to startups. The copying comes in various flavors. Sometimes tech giants simply copy innovative features. When Snapchat was doing well with stories that disappeared after 24 hours, for example, Facebook retaliated by introducing the same feature to its products, including Instagram and WhatsApp. Subsequently, Snapchat’s usership stalled. It has had trouble regaining momentum, and its stock price went down dramatically.

In more egregious cases, whole “form factors” (in Silicon Valley jargon) have been copied. After years of growing its user base at nearly 5% per month (!) Slack’s adoption rate has slackened and started to show signs of decline. The pivotal event? The introduction of Microsoft’s knockoff product, Teams. Microsoft did what it does best: waited to see signs of success (four years, in this case) then copied the offering and later integrated it into its other products.

A third approach is to copy a niche product. Allbirds acquired a cult following by developing a line of wool shoes sourced in an environmentally responsible manner. In response, Amazon copied the top-selling product almost point-for-point and sold it online for nearly half the price.

Despite this predatory behavior — and the resulting reluctance of some venture capitalists to invest — a few startups have managed to survive beyond their early stages and become sizable players in the same space as the tech giants. On the surface, it looks as if they succeeded due to luck or lack of interest on Big Tech’s part. In reality, though, these challengers succeeded by using the companies’ strengths against them. This strategic move, although counterintuitive at first, can lead to copy-proof innovation.

Consider Wayfair. Today it’s the largest online seller of home goods and furniture. Back in 2014, a Harvard case I co-authored described how the company had just merged more than 200 niche product websites into the Wayfair brand. When I spoke with its co-founder and CEO, Niraj Shah, it was clear that Amazon was the constant threat. Over the years, Wayfair had implemented many features that it had seen work for Amazon, and Amazon developers also copied features from Wayfair.

One thing that Amazon did not replicate — and that worked remarkably well for Wayfair — was taking its own pictures of and measurements for the furniture and home furnishings that it sold. This additional detail helped consumers visualize the home decor they were planning, and it helped Wayfair to differentiate itself and get traction. (Its five-year revenue growth has been an astounding 49% [CAGR], compared to Amazon’s 26%.)  Yet, Amazon continued to show only the pictures provided by the manufacturer.

Why? I suspect it’s because Amazon has 3 billion items for sale, whereas Wayfair offers 14 million. The infrastructure and added cost that Amazon would require to take unique pictures of products is daunting, particularly given that more than half its sales comes from the marketplace listings that are managed independently by third-party sellers. And it’s not just about costs. To succeed with Wayfair’s approach, Amazon would need longer lead times for adding new products, reducing the speed of growth at the “everything store.” Plus, it would cause the website to load slower and be more visually cluttered. Amazon could have copied Wayfair, but it chose not to, as that was not in its own interest.

Zulily, which sells women’s and children’s clothing online, found another approach to competing with Amazon in a way that the giant retailer chose not to emulate. Amazon is relentlessly customer-centric: Shoppers tend to get lower prices, quicker delivery times, and great customer service. However, in retailing, catering to the shopper above all else comes at the expense of the supplier — and Amazon’s suppliers put up with a lot. Amazon routinely withholds or delays payment, often arbitrarily. Worse, it copies suppliers’ products and undercuts them, often putting the supplier out of business.

So it made perfect sense for Zulily to offer suppliers high-quality service, commit to volume purchases, and offer fair purchase prices. As a result of Zulily’s approach, many suppliers accepted exclusive supply deals with the startup instead of selling on Amazon’s much larger marketplace. This, in turn, allowed Zulily to offer novel and unique items not available elsewhere. The company grew revenues tremendously — from 2009 to 2014 at a CAGR of 161% — until it was acquired by Qurate, owners of QVC and HSN, in 2015 for $2.4 billion as this Harvard case study shows.

Outside of e-commerce, in its early days Dropbox took advantage of Microsoft’s massive enterprise software sales prowess. For years, Dropbox was a tiny startup with only a few dozen employees and no salesforce to sell cloud storage to enterprise CIOs and CTOs. Instead, Dropbox offers its service for free to individual consumers. As people adopted the service and it grew, Dropbox got this network of people to start using its product at work. Over time, those users lobbied their bosses, CIOs and CTOs, to purchase and offer Dropbox for Business, the subject of a Harvard case study. In other words, they used personal consumption as a Trojan horse.

This judo-like approach, in which a smaller challenger leverages the opponent’s larger size and strength, is promising, but it’s certainly not guaranteed to work or to be sustainable over the long haul. If they don’t copy you, the giant you’re challenging might opt to build a standalone competitor and still copy point-for-point what you built. That said, it’s generally easier to compete with a stand-alone spinoff than the “mother ship.” When TikTok offered a video-sharing app that allowed users to share music snippets, it appealed to younger users who thought Facebook was for their parents and grandparents, and it quickly grained traction. In response, Facebook launched a nearly identical stand-alone app called Lasso, which thus far has not gained traction.

Source: HBR Feb 21, 2020

One success, one winner can pay for dozens and dozens of failures: Jeff Bezos

During a fireside chat at the Amazon Smbhav in New Delhi this week, Amazon's CEO –and the 

world's richest man, Jeff Bezos was asked by Amazon India Head and Senior Vice President Amit Agarwal: "Did you think Amazon would be so successful?"

Bezos replied that he had no idea that Amazon would be such a success. He also called his company "the best place in the world to fail," adding that they have "lots of practices" in this respect.

Expanding on this idea, Bezos outlined the two kinds of failures in business. "Experimenting, trying to figure out something that's not been done and failing - that's a high-quality failure," he said, adding that he and Amit had failed together "many times" over the past two decades. According to Bezos, these "learning failures" are essential because "you're trying to figure out something new, maybe that nobody in the world has done before."

The second type outlined by Bezos was "operational excellence failures," - those embarrassing, wasteful let-downs that the Amazon CEO said we ought to avoid wherever possible. Bezos used the example of his company opening a new fulfillment center - a tried-and-tested operation his people know very - stating that "if we fail at that, it's just bad execution. That kind of failure should not be celebrated."

While he acknowledged these failures could also be learning experiences, they should be avoided at all costs and certainly not celebrated when they do occur. Rather, such occurrences are a time to be "self-critical."

 "Nobody likes to fail," Bezos emphasized, "it's embarrassing. It doesn't feel good. We're all human. We had a good idea. We thought it was a good idea, and nobody came to the party. That happens."

Of course, there is a risk involved, and you never know for certain if your experiment will pay off. For that reason, Bezos says, organizations must "have a culture that supports failure."

There is also the issue of how leaders identify what type of failure they are embarking on before we begin a project. Many variables are within our control, but at a certain point, we have to take that risk and jump into the unknown uncertain if our experiment will pay off.

We tend to think of success and failure as opposing ideas -- the first we aspire to and the latter we are conditioned to avoid at all costs. We learn from our mistakes, though, and this leads me to wonder if success can even truly exist without an initial defeat (or two).

When it comes to failure, there are two types: learning and occupational. Should such endeavors be encouraged -- or even celebrated -- in the same way, we celebrate and encourage success and, if so, should we set aside a budget to allow for such failures to take place? After all, as Bezos says, "one success, one winner can pay for dozens and dozens of failures." It's crucial, therefore, that leaders allot their teams space and time to fail - that single, lucrative success is on the horizon, but cannot exist without failure.

Ultimately, Bezos was upbeat about his career trajectory: when asked where he would be if things hadn't worked out with Amazon, Bezos replied: "I would be an extremely happy software programmer somewhere." Perhaps, then, "failure" is also a case of mind over matter. It's not so much a question of avoiding it altogether, but is bouncing back, starting again, and using our losses to learn.

In your journey as a people leader, what are some of the "failures" that led you to success?

Source: People matters 16 Jan, 2020

How to Leave Work at Work

Some jobs have very clear lines between when you’re “on” and when you’re “off,” while in others the lines are blurred — or potentially nonexistent. That makes not being distracted by work, especially mentally, a major challenge.

This can lead to sitting at dinner while your daughter tells a story about her day, but instead of hearing her you’re wondering whether an email from your boss came through. It can mean exchanging the time you could have spent on sleep, exercise, or talking with your spouse glued to your laptop. And it can look like keeping your work life in order, while your finances or home are a mess because you don’t take time to pay bills, plan for retirement, or tidy up.

As I shared in my article on boundaries, what is possible can vary depending on your particular job, work culture, and coworkers. But in most cases, you can reduce how distracted you feel by work during times when you’re not working.

As a time management coach, I’ve found these four steps can help. I encourage you to challenge yourself to gradually implement these changes and see how much you can leave your work at work — both physically and mentally — in 2020.

Step 1: Define “After Hours”

If you have a traditional 9-to-5 job, your hours are set for you. But if you work in an environment with flexible hours, you’ll need to think through when you want to be on and off the clock. If your employer has a certain number of hours that you’re expected to work each week, start by seeing how to fit those hours around your fixed personal commitments, like taking your kids to school or extracurricular activities, making a certain train, or attending an exercise class you really enjoy. When do you need to start and stop to put in the proper work time?

On the other hand, if your company doesn’t have a specific amount of time that you need to work — say, you freelance or have a results-only work environment — but your job still takes over almost all of your waking hours, take the reverse approach. Think through how many hours you want for activities like sleep, exercise, family, friends, cleaning, finances, etc. Then see how much time you need to reserve on a daily and weekly basis to fit in those personal priorities. That then defines the parameters of when you want to be “off hours.”

Step 2: Have Mental Clarity

Next, make sure you have mental clarity on what needs to get done and when you will complete it. This includes having a place where you write down the many tasks that you need to do, whether that’s in a notebook, a task management app, a project management system, or in your calendar. The important point is that you’re not lying in bed at night trying to remember everything on your mental to-do list.

Then once you have this list, plan out your work. That could mean setting aside time in your schedule to work on a report in advance, putting time in your calendar to prep for your next day’s meetings, or just plotting out specific hours that you will reserve for getting your own work done versus attending meetings or responding to other people’s requests. This planning reduces anxiety that something will fall through the cracks or that you’ll miss a deadline.

The final part of increasing your mental clarity is to have an end-of-workday wrap-up. During this time, look over your daily to-do list and calendar to make sure that everything that absolutely must get done — specifically, those tasks that had a hard deadline — were completed. You also can do a quick scan of your email to ensure any urgent messages are attended to before you leave the office. For some people, it works well to do this as the last thing they do that day, say 15 to 30 minutes before heading out. For others, it’s better to put a reminder in their calendars for an hour or two before they need to leave. This gives them a more generous time period to wrap items up.

Step 3: Communicate with Your Colleagues

In some job situations, you can set a definite after-hours boundary like, after 6 pm, I’m offline. But in other situations, the lines are much blurrier.

For those in situations where you can have a clear dividing line between work and home, I would encourage you to directly communicate that with your colleagues. For example, you might say, “I typically leave work at 6 pm, so if you contact me after that time, you can expect to hear back from me sometime after 9 am the next business day.” Or in some cases your actions can simply set that tone. If they never hear from you between 6 pm and 9 am, that will set the expectation that you’re not available.

But for others, who have jobs that require more constant connectivity, you may want to set some guidelines to control how people reach you, thereby reducing unwanted interruptions. For example, you could say, “It’s fine to text me during the day with questions, but after 6 pm, please send me an email instead of a text unless the situation is truly urgent.” Similarly, if you have a very flexible schedule where you take extended breaks during the day for things like going to the gym or picking your kids up after school, encourage people to reach out to you in specific, preferred ways that you establish. For instance, “There are some times during the day when I may be away from my computer. If you need a fast response, call or text me.” In these scenarios, you’ll know that only the most important work will take you away from your personal or family obligations via an urgent call or text, and you can turn your attention to non-urgent work once you have the bandwidth.

Step 4: Get Work Done at Work

It may seem crazy to say this, but I want to encourage you to give yourself permission to do work at work. For many, they perceive “real work” as something they reserve for post-5 or 6 pm, after everyone else has left the office or for after they’ve tucked their kids in bed for the night. People have this mindset because this time can seem like the few precious hours where no one is dropping by your office or asking you for anything immediately. But if you want to stop feeling distracted by work after hours, you need to actually do your work during the day.

Completing the actions under the mental clarity step will take you a long way forward in that process. Really guard your time. Put in time for project work. Place time in your calendar to answer email. And if follow-through requires going to a place other than your office to work, do it. Make and keep meetings with yourself to knock off tasks. It’s exceptionally difficult — if not impossible — to not be distracted about work when you’re stressed out because you haven’t gotten your work done.

And if you must (or want to) do some work outside of your standard day, make sure that you timebox it. For example, I will work from 8-9 pm tonight then stop. Or, I’ll put in three hours on Saturday from 1-4 pm, but then I won’t think about work before or after. It’s much better to designate a time and stick with it than it is to think about work all night or all weekend and do nothing.

As individuals, we need a mental break to do our best work, and taking time for ourselves — without the distraction of work — can help us become our best selves. I can’t guarantee that thoughts about work will never cross your mind, but with these four steps, you can reduce how much you’re distracted by work after hours.

Source: HBR 03 Feb, 2020