I gave a talk recently on startup sales and marketing where I covered some of the ways that startups are naturally stronger than big companies. You can scroll down for the slides from but what follows is a bit of color you can’t get from the deck alone.
The natural strengths of startups aren’t always obvious. Often the idea of going head to head against a company that has much deeper resources than you do, seems counterintuitive, (particularly for marketing folks who are often overly focused on budget size – more on this later). Normally the comparison seems something like this:
It seems a bit grim really doesn’t it? But anyone that’s spent some time working at a big company will tell you that the things that look like strengths from the outside are often seen as weaknesses from the inside. Here are some examples:
Team Size: As someone who has managed massive teams and smaller teams, I can say for a fact that smaller groups are much more productive. The first problem you get with big teams at large companies is specialization. There’s a person who does copywriting, a person who writes code for the website, a person who manages the marketing software, a person who owns campaigns, a person who focuses on PR, a person who owns product marketing, and well, you get the picture. Now imagine that you want to react to something that’s happening in the market RIGHT NOW. Small, nimble teams staffed with generalists may not produce at the same quality level or volume of output but they can do it fast.
Budget Size: In my first big company role after my startup had been acquired I inherited a budget that was about 10 times the budget I had at the startup. I was pretty sure I was going to achieve total world domination with that big fat budget. What happened instead was that 30% of my money went to fund overall company branding efforts not specifically related to my product, 10% went to fund a group-level set of campaigns, another 10% went to local geography regions (who could opt-out of focusing their efforts on my product), and 20% went to pay for very expensive outside services companies who made sure my graphics and copywriting were up to big company standards. With the 30% left over I could only choose from a menu of “approved” tactics. Non-menu items required further approval (and a super-human level of patience). “My budget” was big but it wasn’t really mine. At the startup I came from on the other hand, I didn’t have a lot of cash but whatever was there was applied directly to building pipeline for my product, and doing it quickly as well.
Brand Recognition – Yes, sure the bigger companies that have been around a while and have invested a bundle to make sure prospects know they exist will have much more brand recognition than your little startup. But what people believe about a brand is often a snapshot of it’s history and not a view of where the company wants to (or wishes it could) go. I worked at a large company that was attempting to make the switch from premise-based software to SaaS and it wasn’t pretty. Everyone knew who we were. But as we attempted to change, that brand awareness was a ball and chain that anchored us to the past. That experience convinced me that the only thing worse than being unknown was being known for the wrong thing.
Big Customer Base, Big Sales Ecosystem – An interesting side effect of scaling sales and distribution is that executives and marketers become increasingly separated from the customers and prospects they sell to. Startups and smaller teams selling directly into a market will have both a more direct line of communication to prospects and customers as well as deeper relationships with them. This allows a startup to see a change or opportunity in a market long before a bigger company gets a whiff that it’s happening.
Not every small company takes advantage of these startup strengths. Not everyone is listening to their customers and connecting with them. Not every startup is building nimble marketing teams staffed with broadly-skilled folks. Not everyone has their positioning worked out to take advantage of the fact that there are places in the market where the established brands simply don’t have permission from prospects to go. But if you do have some of it figured out, the big guys suddenly seem way less scary.
3 thoughts on “The Strengths of Startups versus Big Companies”
Wow, spot on. I have never been truly startup, but I have worked at scrappy “fighter” companies, and what you describe is perfect.
In fact, at one of the “scrappy” companies, someone decided they needed more firepower than me in marketing, so they brought in a big time Microsoft Marketing Director. She proceeded to quadruple the budget, silo-ize the department, and add a lot of crony’s to the team. Instead of winning awards for our marketing (that we had) we suddenly did nothing but internal reports, and raison d’etre presentations.
Hey thanks for the comment!
Yeah, you know, budget is almost never the problem. In my experience when you can show that if you put a dollar in the machine and more than a dollar comes out, you generally don’t have a problem getting more money. My problem has always been more about finding those good tactics in the first place.
The silo thing is a killer! I am starting to see some larger companies get better at scaling without losing that magic that happens when folks know enough about a bunch of things to move quickly or at least are organized into cross-functional teams that can go fast – but that is still rare.
I hope you are right, although, I am pretty sure there is a tipping point when specialization and the formation of silos are inevitable. Probably the time you start having multiple directors of marketing each focused on some aspect of the marketing machine. Sadly, this seems to start with a “social media” director and then it all unravels.
I won’t describe where I am at, but the big company, silo, humongous budget, and low productivity (but with lots of reports showing how effective you are) are the norm. I am in a small group, and we definitely buck the trend, and fight hard.
Glad to see you posting again!