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Startup Versus Goliath: When Your Competition is a Giant

As promised, open source social network and Facebook alternative Diaspora released its source code yesterday. And while it’s a developer release meant to be hacked on and is by no means a finished, there are already of plenty of predictions that Diaspora will fail – or at the least, that the project represents no threat to Facebook.

Diaspora is hardly unique as a startup that faces major challenges by entering into a market or an industry where big companies are well-established.

On a recent TechZing podcast, for example, hosts Jason Roberts and Justin Vincent asked Gabriel Weinberg, founder of the search engine DuckDuckGo if being in the same realm as Google “isn’t that, like, crazy?” But as Weinberg points out, he’s able to “do things that Google can’t copy easily.” For example, DuckDuckGo is able to delivery more satisfactory search results than Google, contends Weinberg, because he can actively address questions of spam without facing charges of censorship or anti-trust – something Google can’t do because of its size.

Being smaller has its challenges, however, argues Dan Neely, founder of the startup Networked Insights, a social media listening platform. Networked Insights competes against some of the established analytics and monitoring firms – Nielsen for example – and Neely argues that having a smaller size company means that hiring is particularly important for startups as with a smaller staff, these decisions can really be “make or break.”

But being small can be beneficial. Neely argues that his company is more agile, and can respond to more quickly than can some of its competitors, particularly when it comes to technological innovation. Using algorithms and natural language processing, for example Networked Insights goes beyond just “brand monitoring” and “rear view” analysis to offer its customers predictive insights as well. So while the startup is up against big-name competitors, Neely isn’t worried. Even without the name-recognition, there is plenty of business for his company.

Going up against major companies can be daunting for a startup. And perhaps, as TechZing suggests, it’s crazy. But too often, when we pit startups against their big business competitors, we assess them on whether or not they’re a Facebook or Google “killer.” DuckDuckGo needn’t “kill” Google. Diaspora needn’t “kill” Facebook. They need to fill a niche, and do it in a way that their giant competitors cannot.

Photo credits: Flickr user Eric Hersman

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