I'm often asked by aspiring entrepreneurs and the curious bystander how a startup ever has the hope of successfully competing against today's monolithic corporations. I like to answer with 'there is no hope' and watch the glimmer of helpless panic flash in the whites of their eyes; a sensation all too familiar to any seasoned entrepreneur.
But after letting the dread settle in for a moment, meant only to humble the average hubris-plagued aspiring entrepreneur, I follow with an explanation.
The preeminent economist, Milton Friedman, was an ardent advocate for the minimization of federal government powers. Friedman boiled the issue down to a matter of interests. He noted that the interests of the average voting citizen, when it comes to national affairs, are diffuse at best. We worry about our jobs, we worry about our families, we worry about the pothole down the street, we worry about the neighbors barking dog that won't let us sleep, and only then do we spare a fickle thought on labor laws and national oil exports.
This means that the average citizens focus on any one issue / interest is woefully insubstantial. We, the commonwealth, are the elephant; formidable in our size and power, yet cumbersome and slow to act.
On the other end of the spectrum stands the lobbyist. This individual (or organization in the general case) is wholly committed to advancing his / her interest in a singular, specific domain. This interest represents the lobbyists' essence, livelihood and solitary focus. The special interest group is the tiger; relatively small in size, but incredibly focused and agile in pursuing its interests.
Who stands a better chance of promoting their respective interests in a specific matter / industry? Would you bet on the distracted, disorganized commonwealth? Or would you place your stake with a lobbyist group that ruthlessly pursues is limited goals? The late economist of our time understood that interest is a fundamental catalyst of efficacy and success.
My love for Milton Friedman aside, this understanding of interest was at the heart of my response to the starry-eyed entrepreneurial hopeful; the infant startup has no hope of competing against the full force of today's massive corporations with their seemingly limitless resources and reach. BUT, the tiger startup has an abundance of hope in pursuing its singular interest against the many diffuse interests of the corporate elephant. Let's take at a few recent startups who compete against giants, as a case study:
Dropbox and Evernote are two very successful startups competing against elephants like Google and Microsoft. That's right, these startups compete against Fortune 100 companies eventhough they are very small companies. But then again, They don't. They compete with only one of the products from hundreds of offerings from these giants, which is only one of the ostensibly infinite interests of these quintessential elephants. And while the elephant is forced to divert its attention to its many other products and services, these small startups focus solely on innovating in the realm of one product for their targeted market.
Therein lays the hope of the entrepreneurial tiger against the abstracted corporate elephant: More focus, more agility, more interest.
By now, I've likely befuddled the poor inquisitive entrepreneur with talk of Milton Friedman, zoo animals, and Fortune 100 companies. Yet, the whites of his / her eyes have cleared and the cringe of panic recede from his / her expression.
Renewed with a shred of contingent hope, a tiger is born (hopefully).