Sproutly A Blog for Young and Growing Entrepreneurs

Big Companies As Market Openers

In Trends on 27 October 2008 with Comments

It is normal to be afraid of big companies. With all their resources, they are a major competitors and steal your customers with a snap of a finger. For example, I’m sure Google Calendar killed a lot of other web applications out there. However, another view that people don’t normally think about is to look at large corporations as market openers. As much as they have the power to move things against your favor, they have just as much power to move things in your favor.

Sometimes, entrepreneurs have really great ideas, but the market or infrastructure is just not there yet. Big companies have the power to move the industry, thus complementing your ideas. More often than not, you need them as much as they need you. Let’s take a look at some examples.

1. Photobucket and Myspace. Photobucket had been known as the “parasite” of MySpace. It was the go-to site when uploading pictures and hotlinking them from your MySpace. The social network created a huge market for people to show off pictures to one another. As a result, MySpace acquired Photoshop. Both would not be the same without one another.

2. Blogging and Google. I would argue that blogging would not be as successful if it weren’t for Google indexing them. Blogs seem perfect for a high page rank: unique content, lots of words, many pages within the site, and updated constantly. Linking to one another is almost essential in blogging, as pro bloggers live off their SEO. Again, both parties have benefited greatly.

3. Mobile Apps and iPhone, G1. Mobile applications has long been known as “the next big thing.” Every year, investors repeatedly say that this was the year for mobile applications to take off. Each year ends in disappointed. However, with iPhone and G1, innovation has finally begin to take off. Of course, the story has just started and things are only beginning to pan out. It will be interesting to see what the future holds. How open or close Apple and Google wants to be going affect how startups operate.

There are other examples, such as iLike and Facebook, YouTube and the rise of broadband. Take a look at what big companies are doing now. Where are they moving and take advantage of the opportunity. As simple as that sounds, I’m not sure exactly how easy it is to do that. As smart as you are, the market can make or break you.

To quote Marc Andreesen:

Ironically, once a startup is successful, and you ask the founders what made it successful, they will usually cite all kinds of things that had nothing to do with it. People are terrible at understanding causation. But in almost every case, the cause was actually product/market fit.