Many cloud automation startups I advise experience similar challenges. A lack of resources like time, money, talent or a combination of them is a common one. Then as incumbents in a marketplace where the giants command a big piece of the market share, they struggle to build consumer awareness and adoption. What to do when the odds are against you? The art of battling giants lies in the underdog turning their greatest weakness into a strategic strength, says Malcolm Gladwell in David and Goliath. But how can startups leverage their weaknesses as strengths?
Where a resource problem exists
First let’s look at the resource problem using software testing as an example. Historically, it’s always been a challenge to attract talent into the testing part of the software development lifecycle. In part, this relates to a classic industry problem that if you’re as good a QA as an engineer, you’d rather be an engineer. However, both large enterprises and startups alike need proper testing to release a quality product to customers.
But unlike the giants that can afford to ship beta style products and get customers to test them while they bank on profitable product lines like search and maps, startups have no such backup. They have a single product and often one opportunity to prove themselves to the customer. If the product fails to form a good impression, the customer abandons the brand or worse the competition grabs their attention.
Startups that cannot afford more testing talent compensate with the unit and functional tests developers write and automate the rest. They use automation tools plus scalable resources in the cloud to test scenarios like meeting traffic demand spikes of hundreds or thousands of client requests and dynamic database changes. In the same way, in areas outside their business focus, they don’t hesitate to leverage the tools built better externally. They’re open to adopting external technologies and solutions that make them more efficient. They don’t focus on building apps for their internal needs just because they have the engineering talent.
Rather they leverage external products like Salesforce, Workday, Marketo. They have neither the resources nor the dollars or the time to build an HR app or install an ERP app. Instead, they say we don’t need all the customization that a typical large enterprise needs. We’re happy with what we can get from Salesforce, NetSuite, or Workday.
Where there’s a market
Big companies with large IT departments can say, hey, let’s go develop the tool we need ourselves to keep the teams we have busy. But startups have to stay razor-sharp focused. The focus to deliver a niche value overlooked by the giant companies. In the cloud automation space, finding a niche is not hard. Studies from Gartner and 451 Research show that companies increasingly spend more on IT. IaaS and Paas are steadily on the rise. Whether the business is about gaming, multimedia, e-commerce, the web or mobile apps, all of them need technology and automation to transform their businesses to reach the market and customers faster. In the shift to the cloud, security is one concern, so that opens up a whole other market. Then there are Agile and DevOps practices that transform the software development lifecycle allowing businesses to innovate their core competency without worrying about how applications run in the cloud.
Where awareness and adoption lag
How can a startup with a small marketing budget beat the dominant giants to build customer awareness and adoption? This problem seems insurmountable. But the key lies in customer acquisition and customer service. To the customer of a giant company with hordes of other customers, their needs feel like a small fish in a big sea. But for a startup founder striving to solve niche problems, that customer is a god. I’ve seen this leverage work for startups even against giant companies where “intrapreneurs” harness the power of startup-like methods and lean operations to stay ahead of the curve. That leverage is human enterprise and passion. You only have to look at the success of every David that beat a Goliath in any sector. In each example, you see a similar personal story emerge. The startup founders embrace niche problems with a revolutionary passion as if fighting a cause. This passion, a kind of madness to solve niche problems, builds a strong empathy and bond with the customer. This wow servicing factor is a crucial element in attracting customers. One that giant companies find hard to do.
To beat the odds, the startup underdog must turn their weaknesses into strengths.
- Where you lack in resources, integrate with external tools and automate with engineering skill.
- Where awareness and adoption stagger, focus on winning customers with a passion to “wow.”
- Where cloud automation is the market, find your niche. Is it security, auto scaling virtual infrastructure, or automating build environments for the software development lifecycle?
As I say to my portfolio companies, it’s always in the power of the underdog to tip the Goliath over. You just have to find the Achilles heel.