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Business Growth and Biology
It would seem the Four Horsemen already have a monopoly on the key
organs of the human body. So, what’s left? And if there is no other great
market opportunity, how do you compete with
them
?
Let’s take the latter first. The current horsemen look so gigantic, rich, and
dominant that it would seem impossible to attack them directly. And that’s
probably the case, but history suggests there are other strategies. After all,
each of these companies in their day had to take on equally dominant and
established corporate giants—and beat them.
For example, when Apple started out it faced several huge competitors.
IBM was one of the biggest companies in the world and dominated
electronics in the workplace (as the saying went, “Nobody ever got fired for
buying Big Blue”). Hewlett-Packard, almost as big a company, and arguably
the best-run company of all time, owned the scientific handheld and desktop
calculator business. And Digital Equipment was running neck and neck with
both companies in minicomputers—and winning. How could Apple, started
by two scruffy phone hackers in a garage, possibly compete with these
monsters?
It did so with a combination of fearlessness, superior design, and luck. You
know about the first two, but the third might surprise you. Steve Jobs knew
he had a world-class product in the Apple II thanks to Woz’s brilliant
architecture and his own elegant design. But no corporation was going to buy
his computers when they could buy inferior, but adequate, machines at a
lower price and guaranteed volume delivery.
So, Jobs instead went after the individual consumer. There, he had free
reign: his small competitors were stuck building hobby machines that average
folks didn’t trust or understand. Meanwhile, IBM was staying out of personal
computers because it was fighting antitrust indictments over its mainframe
computers; DEC had dismissed the idea of consumer computers, and HP—
even after Woz offered Apple to Bill Hewlett—decided to focus on engineers
and other professionals. Within three years of its founding, Jobs and Apple
owned the personal computer market.
Then something interesting happened: those same consumers started
sneaking their Apple computers into the office. It wasn’t long before an
insurgency was in full flower, with individual employees by the thousands
using their Apple computers at work in violation of the rules put down by
their employers’ IT departments. That was the beginning of Apple “cool”—
users felt like mavericks, corporate guerillas, fighting the Man in the MIS
department. That’s why, when IBM finally unleashed its PC, it destroyed the
rest of the personal computer industry. But Apple, like the tiny mammal
skittering under the feet of a dinosaur, survived … and eventually triumphed.
Google did the same thing by pretending to be small, cute, and honest with
its simple homepage—even after it crushed all other search engines.
Remember, Google started on Yahoo, which decided to outsource search to
the little engine that could—and did: Google became a hundred times more
valuable than Yahoo, which didn’t see the threat. Facebook defeated the
dominant Myspace by being the nice, safe alternative that wasn’t overrun
with sexual predators, or at least the fear of them. Facebook’s roots on Ivy
League college campuses made it feel more upmarket and safe: it demanded a
.edu email address. The requirement to confirm, and share, one’s identity
created a different, more civilized decorum on Facebook.
Content on Twitter is more likely to get a hostile response than when
posted on Facebook, since, similar to real life, it’s easier to be an asshole
anonymously. Amazon was careful never to portray bookstores as
competition, even asserting that they wanted them to survive—the same way
a reticulated python feels bad for the cute little mammal it suffocates and
swallows whole. Similarly, as Amazon invests billions in last-mile delivery,
Mr. Bezos claims Amazon has no intention of replacing UPS, DHL, or
FedEx, but to “supplement” them. Yeah, that’s it, Jeff and Amazon are here
to help.
There is no reason to believe that these strategies—insurgency, false
humility, security, and simplicity plus discounting—won’t work again one
day against the horsemen. Giant companies face their own challenges: they
lose their best talent to more rewarding start-ups; their physical plant grows
old; their empires grow so big they can no longer coordinate all their pieces;
they get distracted by investigations by envious or nervous governments. The
processes put in place to scale begin slowing the firm down, as managers
begin believing that adhering to the guidelines is more important than making
good decisions. Bezos insists that there will never be a Day 2.
12
It may seem
unlikely that Amazon will one day lose its way. It will. Business mimics
biology and, thus far, the mortality rate is 100 percent. The same is true of the
Four. They will die. The question is not if, but when, and by whose hand?
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