Big Companies Cannot Successfully Copy Startups

March 16, 2022

Big companies cannot successfully copy small companies (startups or otherwise) because they cannot execute and pivot fast enough to not lose interest

I worked for a big company for a few years when we were informed we were starting a new project from scratch.

I was happy to learn that new developments are possible after years of maintaining or buying existing startups.

It took me quite a while to learn that this was just copying another startup in the field. I did not even know that startup. It was new to me, but apparently, it was already widespread.

The problems started to pile up right from the start. But for the sake of brevity, I will prioritize by severity:

  • The decisiveness - big companies, are “committed” - It was evident that a direction and partnership with a beta technology of another company were sub-par by far, and we shouldn’t rely on it. BUT, we committed to the powers that be. That was the answer I got. Year went by, and that technology failed to deliver and closed, and we got stuck with a pile of code leading nowhere.
  • The “I just wanna have fun” - The project was going on for years with no success, and the vultures were circling in on the budget. One day we got a visit from an executive who told us that it was exciting for him to play with this new cloud thing, so he is taking the budget and firing half (of a very profitable - other product we were maintaining). Six months later, he was fired, but half the team was missing, so no long after, everyone was fired, and the other successful product was sunk.
  • The technology - since we were who we were with what we have known, we used what we know. A slow on-prem technology was great for what we did for years but had no foresight. The cloud was closing fast.
  • The bottom line - Big companies are already successful in bringing in big money. Anything less than 10% of the revenue is slowing down growth. Therefore, management usually cancels new projects when they don’t show promise fast enough.

The problem for publicly owned companies or companies that do not have sustained decision stability is that they cannot commit to anything for more than a few months.

Oh, they can maintain a product forever with success. That is what big companies are good at. They cannot be agile enough to pivot when necessary and not lose interest if the product does not immediately succeed.

Therefore such companies can start successfully by copying other startups but quickly fail because they cannot decide on anything quickly enough to get a significant foothold in the market. This is why big companies resort to buying startups or smaller companies.

In the past, big companies were in a hurry to “integrate” startups they bought into the big company. In recent years, they have avoided that. Now big companies leave the startups where they are as they are. Usually for a few years.

Big companies are usually comprised of big hierarchies. The one I was working on had 12 such levels when I arrived. In this setting, there is no way to reach the higher levels to tell them that there is a problem if even one of the levels is a yes man.

So every time someone tells me that if a big company hears my idea, they’ll just copy it. I laugh and say “let me tell you a story”.

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Hi! I am Tzahi Fadida, and I teach how to jump-start your professional dream by methodically bootstrapping your business and without quitting your job.

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