How Startups Foster Technological Disruption

What startups lack in muscle, they make up for in speed, adaptability, and a lean nature that is perfect for innovation and disruption.
May 24, 2022
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People often use fishes and ponds metaphors to explain business dynamics. Big fishes are influential, powerful market leaders with plenty of resources to push their business forwards. Small fishes, on the other hand, are adaptable and lean; what they lack in power, they make up for in speed and flexibility.

Big fish vs. Small fish is a perfect analogy to describe why it seems that big corporations are stagnant in comparison to startups. Why for example, in the social media space, TikTok broke every single record in 2021 while Facebook, Instagram, and the rest of Meta’s suit lagged behind.

One of the biggest anxieties for new entrepreneurs is thinking about their product competing against tech giants. But, what if I were to tell you that being the small fish in the giant pond does have its advantages? 

When Size Weights you Down

Jack and the Beanstalk, The valiant little Taylor, or David and Goliath. The classic tale of the underdog facing an unsurmountable threat and rising triumphantly is part of the west’s folk psychology. Something about these stories rings deep. We relate to the feeling of powerlessness when facing overwhelming odds.

For many startups, that’s exactly the feeling their founders experience when they realize that their ideas are going to compete with established competitors, including juggernauts like Meta or Google. But there is another side to these tales: the hero wins not because of brawn or raw power but because of their wits. The lesson is that strength is more than muscle and that it hides where you least expect it.

All it takes is a little shift in perspective. Being the smallest fish in the pond comes with many perks, it’s a matter of understanding what those perks are and how to best exploit them.

Case in point, Meta, back when it was called Facebook, lost over $6bn due to a six-hour outage of all their services. Even the Oculus user base couldn’t use their devices because they couldn’t sign in to Facebook.

For a tech giant with products based on engagement, a six-hour outage is nothing short of a catastrophe. The same can’t be said for smaller businesses since the operation costs are on very different scales. The risk and loss related to the same kind of outage are minuscule by comparison.

The keyword here is scale, as the saying goes, the bigger they are the harder they fall. Mistakes cost money and bigger mistakes cost more money. As such, it’s natural for big companies, especially those who have to answer to investors, to become risk-averse.

There is a reason why I’ve focused so much on social media examples. Instagram started as a small-scale social media that got bought out by Facebook, same with WhatsApp. These were products that started small, tried something different, and ended up exploding in popularity and scope.

They are now synonymous with Meta, but that wasn’t always the case. Someone else had to take the first step and put the product out there, someone had to take the risk, and small-scale bussiness has less to lose and more to gain by trying to innovate. That’s why small fishes go in tandem with technological disruption.

What is Technological Disruption?

In business theory, disruptive innovation is an innovation that evolves the market in new ways, either by creating new makers altogether, adding new value to a current market, or displacing current trends, products and alliances.

Keep in mind that disruption is a process, not a product or service. For example, YouTube was a source of disruptive innovation, since it basically cemented the bases for video streaming via web browsers and community-based video sharing.

YouTube in itself isn’t the disruption, but rather the effects it had on the market. Other companies saw what they were doing and realized the potential for web streaming, and even adjacent markets like hardware companies realized that there was a growing market for professional but accessible recording equipment.

Disruption isn’t something that just happens inside the mainstream, it’s what happens when someone breaks away from the mainstream and introduces something different. Even the smallest change can have far-reaching consequences.

Smaller companies don’t have to convince their investors of the potential success of a new idea, they don’t have to answer to a CFO or get approvals. This translates to both adaptability and flexibility, it’s that silicon valley dream of five developers inside a garage with complete creative control over their work.

That’s not to say that startups don’t have to tread carefully. Smart decision-making is a key factor in the success of new businesses. But in contrast to the bigger fish, they have more wiggle room, are better at adapting to changing markets, and have more to gain by disrupting their environment.

The Comfort of Stagnation

People don’t like change. We might think we do, but once we grow accustomed to something it’s very hard to get out of our comfort zone. This is something that established products know very well, the bigger your audience, the more difficult it is to change your appearance or the experience of your product without facing backlash.

There are two reasons for this, first, your presentation and experience slowly become part of your identity. For example, the 140 characters per tweet started as a way to mitigate data transfer, but it quickly grew to become part of Twitters culture, to the point where the 280 character upgrade was met with backlash.

The second reason is that the bigger you are, the more attention your products draw, which in turn means more scrutiny. It’s very hard to create something new that works as expected out of the gate, bugs are part of the process, but if you are big enough, every single technology blog is going to talk about your screw-up.

That’s why many companies prefer whatever is tried and true rather than trying to innovate. Social media is a perfect example, almost every service out there started implementing their own version of Instagram stories once they realized how popular they were.

As a small fish, trying to go against the big fish on equal terms is a death sentence. They have the resources and the sheer muscle to push you out of the competition. Smart startups understand this and instead play dirty, by finding those niches that aren’t covered by mainstream solutions.

Ironically, being small means that these fishes can take a greater risk. If you want to see what’s going to disrupt the tech industry next, don’t look at the mainstream competitors, look at the little folk at the fringes, look at the Ubers, the Snapchats, and the Airbnbs, that grew from small experiments to worldwide phenomenons.

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