One of the most common refrains I hear from people when talking about a new startup in the Village is “doesn’t so and so already do that?” Why, yes, you’re right, XYZ company does do a similar thing as the new startup. So, then, why is the new startup doing what they’re doing?
Answer: they don’t fear the dominant vendor.
Let me explain further:
- Large, fast growing markets have room for multiple vendors as most aren’t winner-take-all or winner-take-most
- Markets have segments like small-to-medium sized businesses and large enterprise customers, which have different needs
- Vertical specialization is the next wave of successful startups, so even if the new startup looks like the dominant vendor, the vertical specialization creates significant differentiation
- Incumbents, especially as they get larger, move slower and slower creating room for startup to outmaneuver them (speed and ability to stay close to the customer are two major reasons startups win)
So, the next time someone brings up a dominant vendor in a category, think about some of the reasons why a new startup can carve out a successful space in the same field.
What else? What are some other reasons startups can be successful in the face of a dominant vendor?
David Cummings on Startups 