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Also worth noting the downside of scale: some opportunities are "too small" for a Microsoft or Google to pursue. Google revenue for 2018 was $136.8B. Extra ef

Also worth noting the downside of scale: some opportunities are "too small" for a Microsoft or Google to pursue. Google revenue for 2018 was $136.8B. Extra effort to possibly address a small niche segment of a market, that would improve revenue by $1M per year, is too small to draw anyone's attention. However, that same $1M/yr is enough to sustain a bootstrapped business and even possibly build the credibility to raise a larger round and try to win the space. If a company is already solving a problem, a better question to ask is "why didn't I know they exist?" It may be that they aren't properly tailoring their marketing to the target audience, in which case you have a clear opening. As a "personal anecdote", we (https://sheetjs.com/ https://sheetjs.com/) offer a variety of solutions for problems involving structured data. Before we started, there were plenty of solutions but every solution had various compatibility issues or didn't work with our data. Even in 2019 companies turn to us because of compatibility issues with Google Sheets or Excel 2019. We went through the same analysis and concluded that neither company thinks there will be a meaningful improvement in revenue or marketshare

dx034 7y ago
> However, that same $1M/yr is enough to sustain a bootstrapped business and even possibly build the credibility to raise a larger round and try to win the space. And often, $1M/yr is not even needed. Many developers don't necessarily want to become managers and worry about funding rounds, hiring, etc. $1M/yr is already a pretty good lifestyle, no need to get further funding or scale the business if you're happy running the project on your own.
- majewsky 7y ago
  FWIW, @sheetjs took that $1M/yr to be revenue, so your profits are going to be smaller than that.
hw 7y ago
Don't forget that large companies and established players typically are extremely bad in listening to their customers or providing good support since it doesn't scale well for them to do so. Even if the product is the same, you can steal marketshare by being responsive to your customers and being able to iterate at a quicker pace than the larger competitors. Competition isn't bad - that just means there's a market large enough for different companies to want to fight for a share of.
- JohnFen 7y ago
  Yes, this is a great point. As a small businessperson, I find it's critical to be aware of the different strengths and weaknesses that come with being big or small, and to leverage them to your advantage. My favorite one-liner about the difference is: small companies make it possible, big companies make it cheap.
z3t4 7y ago
> It may be that they aren't properly tailoring their marketing to the target audience, in which case you have a clear opening. Then you would start a marketing company. Or it will become a fight about who spends the most on marketing, and the only winner would be the marketing companies.
pkghost 7y ago
> $1M per year, is too small to draw anyone's attention. I'll take this opportunity to tell a long-winded story about how that number can be two orders of magnitude larger, and still be too small. I was with Slide when Google bought us in 2010. They bungled the acquisition (bought us to work on Google+, which had already made a bunch of disagreeable decisions by the time we were ready to rumble), so we were left to our own devices for a year, in which time about 12 of us made something called Photovine, a photo sharing app that would have competed with Instagram, and we were getting pretty universally positive press. I think TechCrunch called it the best mobile app google had ever produced, and all of our beta and early release engagement numbers were bananas. (We also had loads of fun with it — the core sharing mechanic was organized around shared captions that we called vines, and we spent most of our play-testing time swapping visual puns.) Anyway, if you project our trajectory generously, which didn't seem out of the question given our early traction, we would have wound up competing with Insta, doing business in the hundreds of millions. But Larry, in all his "more wood behind fewer arrows" wisdom, decided to axe the project, as he did many, many others, and re-assign all of us to YouTube, which, granted, was gearing up to compete with TV, and needed more staff.
- anchpop 7y ago
  I remember looking at photovine when it came out. I was only 11 but I thought it was a brilliant idea. And it was so much more colorful than any other Google apps I'd used at the time.
pradn 7y ago
Also personnel costs at FAANG are high - something like 200-250k per engineer. The upside has to be very high, accounting for the personnel costs, to make building a product worth it.

dx034 7y ago

> However, that same $1M/yr is enough to sustain a bootstrapped business and even possibly build the credibility to raise a larger round and try to win the space. And often, $1M/yr is not even needed. Many developers don't necessarily want to become managers and worry about funding rounds, hiring, etc. $1M/yr is already a pretty good lifestyle, no need to get further funding or scale the business if you're happy running the project on your own.

majewsky 7y ago
FWIW, @sheetjs took that $1M/yr to be revenue, so your profits are going to be smaller than that.

hw 7y ago

Don't forget that large companies and established players typically are extremely bad in listening to their customers or providing good support since it doesn't scale well for them to do so. Even if the product is the same, you can steal marketshare by being responsive to your customers and being able to iterate at a quicker pace than the larger competitors. Competition isn't bad - that just means there's a market large enough for different companies to want to fight for a share of.

JohnFen 7y ago
Yes, this is a great point. As a small businessperson, I find it's critical to be aware of the different strengths and weaknesses that come with being big or small, and to leverage them to your advantage. My favorite one-liner about the difference is: small companies make it possible, big companies make it cheap.

z3t4 7y ago

> It may be that they aren't properly tailoring their marketing to the target audience, in which case you have a clear opening. Then you would start a marketing company. Or it will become a fight about who spends the most on marketing, and the only winner would be the marketing companies.

pkghost 7y ago

> $1M per year, is too small to draw anyone's attention. I'll take this opportunity to tell a long-winded story about how that number can be two orders of magnitude larger, and still be too small. I was with Slide when Google bought us in 2010. They bungled the acquisition (bought us to work on Google+, which had already made a bunch of disagreeable decisions by the time we were ready to rumble), so we were left to our own devices for a year, in which time about 12 of us made something called Photovine, a photo sharing app that would have competed with Instagram, and we were getting pretty universally positive press. I think TechCrunch called it the best mobile app google had ever produced, and all of our beta and early release engagement numbers were bananas. (We also had loads of fun with it — the core sharing mechanic was organized around shared captions that we called vines, and we spent most of our play-testing time swapping visual puns.) Anyway, if you project our trajectory generously, which didn't seem out of the question given our early traction, we would have wound up competing with Insta, doing business in the hundreds of millions. But Larry, in all his "more wood behind fewer arrows" wisdom, decided to axe the project, as he did many, many others, and re-assign all of us to YouTube, which, granted, was gearing up to compete with TV, and needed more staff.

anchpop 7y ago
I remember looking at photovine when it came out. I was only 11 but I thought it was a brilliant idea. And it was so much more colorful than any other Google apps I'd used at the time.

pradn 7y ago

Also personnel costs at FAANG are high - something like 200-250k per engineer. The upside has to be very high, accounting for the personnel costs, to make building a product worth it.