Perhaps your business is competing in an entirely new location free of established competitors. Most of us, however, start companies that compete with existing offerings from large, established companies. Your job is to come up with a better mousetrap – not the first mousetrap.
This challenge was faced. In this post, I would like to share some of the lessons learned from that experience.
Backblaze Vs Giants
Competing with established companies that are orders of magnitude larger can be challenging. How can you succeed?
Determine what success means
For a long time Apple considered Apple TV a hobby, not a real product to focus on, as it did not generate a billion in revenue. For a $ 10 billion per year revenue company, a new business that generates $ 50 million will not move the needle and is often not worth focusing on. However, for a startup, receiving $ 50 million in revenue can be the start of a wildly successful business.
2. Use Lack-of-Scale as an Advantage
You may have heard Paul Graham say “do things that are not massive.” There are things you can do specifically because you don’t have the same scale as veterans. Use as an advantage.
When we look for data center space, we have more options than our largest competitors because there is simply more space available with room for 100 cabinets compared to 1,000 cabinets. With some searching, we can find data center space which is better / cheaper.
When floods in Thailand destroyed factories, causing hard drive supplies in the world and tripled prices, we started drive farming. The Giants certainly can’t. It was a little crazy, but it lets our customers keep prices unchanged.
Our Chief Cloud Officer, Tim worked at Adobe. Due to their size, any new product always needs to be launched in a multitude of languages and global markets. Once launched, they had scales. But launching any new product was incredibly challenging.
3. Create a better product
This one is probably obvious. If you are going to provide the same product, at the same price, to the same customers – then why it? Remember that better does not always mean more features. Here is a way that we have created a better product that does not need to be a big company.
All online backup services require what customers include in their backups. We found that this was complicated for users because they often did not know what backup was needed. We flipped the model to backup everything and allow users to opt out if they wanted to, but didn’t need to. This reduced the number of features / options, making it easier and better for the user.
This did not require the resources of any large company; It simply requires customers to understand deeply and think separately about the solution. Producing a superior product is the most classic startup competitive advantage.
4. Provide better service
How can you provide better service? Use your advantages. The uplift from your customer service people to engineering can go through fewer hoops. Fixing a problem and shipping can happen quickly. Accessing real answers on Twitter or Facebook can be more effective.
The strategic decision we made was that all customer support is available at our headquarters as a full-time employee. This ensures that they are in close contact with the entire company to respond in both ways.
Having a smaller team and fewer layers enables faster internal communication, which increases customer happiness. And the choice to do things that do not scale – such as helping the customer in a unique situation – can go a long way in building customer loyalty.
5. Remove unnecessary
After determining that the industry standard EMC / NetApp / Dell storage servers would be too expensive to build our own cloud storage, we decided to build our own infrastructure. Many said that we were crazy to compete with these multi-billion dollar companies and it would be impossible to build low cost storage servers. However, not only did it not prove impossible – it was not as difficult either.
A major trick? Remove unnecessary While EMC and others built servers to sell to other companies for a variety of use cases, Backblaze required servers that would only run Backblaze, and for single use cases.
As a result we can tailor the server to our needs by removing redundancy from each server (when we will run redundant servers), and using low-performance components (since we will achieve high performance by running parallel servers).
What do your customers and use cases need? This can often trim costs and complexity while improving the product for your use case.