Do Big Companies Really Kill Startups? (Or is it about Speed)

How would you feel if you are founder of Bit.ly and you came to know about Twitter’s url shortener launch?

The game is over? Or the game has just begun?

While I leave the positive thinking powers aside, does size really matters?

You must have heard statements like ‘Google/Facebook Launches <X>, ‘Y will be dead’’ (most recently with Facebook launching Places and everybody called it ‘Foursquare killer’).

For example, when Chrome was launched, it was touted as Firefox Killer. Today, they both exist (and Chrome is forcing Firefox to innovate).

The thing is startups do not die because of a killer competitive product (no matter what the size is) – they die because of (lack of) speed.

The current state of Yahoo isn’t because of Google – it’s purely because Yahoo chose to stay slow and didn’t read the writing on the wall.

What do Big Companies Kill?

Innovation.

And that works in a startup favor! Google could have done a Twitter (dodgeball), but didn’t. Intuit could have done a Mint, but they didn’t.

Big companies are good at killing innovation within the company. Thanks to bureaucracy, most of the innovative ideas do not see light of the day. Except Google (and a few others), how many big companies do you see innovating in technology space?

The major differentiator that a startup has is the insight they bring to the table – most of the biggies will spend ages to get to that insight and probably fail, while a startup has the access to ground realities (translates to a focused market approach).

Unless the pie is fixed, competition’s size doesn’t matter so much – it’s the speed that counts. Rather, I would rather call it Velocity – because velocity is speed + direction.

Aside, a great competition forces one to innovate and find lateral ways to stay ahead in the curve.

Frankly, the only benefit startups enjoy is their size which enables them to experiment fast, fail fast and keep trying new stuff. Because of the size they are in direct contact with market – a phenomena which is very often outsourced to a third party in big companies.

What’s your take? If you are a startup, do you fret when you see a big company launching a competitive product?

Aside, there is a wonderful book called ‘It’s Not the Big That Eat the Small…It’s the Fast That Eat the Slow“.