Strong Opinions @marksbirch

Random thoughts from a NYC entrepreneur and investor about start-ups, technology and the people that make it all happen. Also find time for good tunes and good food.
Recent Tweets @
Posts I Like

You probably have heard of this term as a reference for really big, market dominating companies. It originated from the quip:

"Where does an 800 lb. gorilla sit?"

"Anywhere it wants to."

While there may be other big companies competing in the same market, the 800 lb gorilla has the outsized share of minds and revenue. Their command of the market is such that it controls access to customers, scares away competitors, and crushes budding upstarts.

The good thing though is that being the 800 lb gorilla is not a permanent position. Markets change, economic cycles occur, innovations happens, and poor decisions are made. If you look at the Fortune 500 list when it started in 1955 till now, the amount of turnover is startling. Here is one stat that really stood out: only 13.4% of the Fortune 500 companies in 1955 were still on the list 56 years later in 2011.

But what does that mean for the early stage startup that are more like the 5 oz mouse?

It means having to fight a ton of battles. You are convincing customers to trust you over the obvious (and more career safe) choice. Getting investors on your side becomes an ongoing struggle. You are forever dealing with the question “how are you different than X” and “doesn’t Y already do that? and “what if Z decides to enter your market?” Of course you are different and the 800 lb gorilla does not nor plans to enter your market, but you probably do not have the multi-million marketing budget and fancy global conferences to convince the world otherwise.

The best advice is to not play their game. The thing about being the 800 lb gorilla is that they tend to move really slow and information flows very slowly in those organizations. If you try a frontal attack on the market though, you will be noticed and you will be crush. You need to play your game that speaks to your unique value.

When Siebel was the 800 lb gorilla of CRM, Salesforce was considered nothing more than a low-end sales tool. But Salesforce played the “no software” web SaaS card and convinced the early adopters to come on board. Next thing you know, Siebel falters and Salesforce enters the market vacuum to become the dominant CRM technology provider. Siebel had a web front end and had a cloud solution, but it was never a focus.

At Enhatch, we get the Salesforce question all the time by customers and investors. For many, we will never be a good fit because they think Salesforce works for their organization just fine. However, there are early adopters that understand that a mobile first platform focused on customer engagement is something that Salesforce does not understand or offer. If anything, we make Salesforce relevant for companies again where it had gone underutilized and poorly adopted beforehand.

The point is that taking a tangential approach to the market is going to be the winning strategy for startups. You will not convinces a lot of people early on, but those are not your customers yet. You need to grow into those more conservative customers and gain a bit of traction first. The smart investors and businesses understand that though, which is why they are willing to gamble and make big bets on early startups. If those startups start to catch fire, they could eventually topple the 800 lb gorilla, breakup the monopolies, and disrupt an stodgy industry that brings a fresh approach and a more dynamic, open economic model that is better for customers, whether consumers or enterprises. You may be small now, but you got time to grow and the opportunity to seize.