“When I got together with my founding team, whenever we were starting a company, we would never look at the big incumbent giant as competition.  Giants would rather die than change.”

iStock_000006290391XSmall.jpgThis quote is a gem.   It was delivered by a Silicon Valley entrepreneur with two very large successes to his name who is now a venture capitalist.  We were both on a panel discussion before a group of entrepreneurs in the heart of Silicon Valley, and we were talking about how companies can compete against enormous odds and massive competitors who, on paper, should be able to roll over and crush them.

Given what looks to be so clear a likely ending, it’s interesting to note the almost cavalier attitude this individual showed to competition.  And yet, when you question those who have gone down this path, you come away with more than just good stories. You come away with the understanding of why smaller competitors may have the upper hand more often than not – and why.

Seth Godin told the story last month about the tremors that went through his company, Squidoo, when Google jumped into his space.

“In June of 2008, Google launched Knol, a “monetizable” Wikipedia, or, as some people saw it, a Squidoo killer.  Not the same as what we were doing at Squidoo, not focused on individuals and their passions, but close enough for discomfort. Our tiny team was in the headlights of a very big company…This week (November 25, 2011), three years after the launch, Google threw in the towel and closed down Knol.”

Godin cites three main reasons why it’s not always about the giant, namely that storytelling and personal connection – and the loyalty that builds as a result of it all – is what keeps a company afloat, rather than its underlying technology; that first movers are more focused on external users than internal reports – or the competition, for that matter; and that a pure focus will often beat out the giant’s many competing priorities.

I had the rare opportunity to interview a pretty good representative sample of some of the world’s most successful giant killers in Killing Giants: 10 Strategies to Topple the Goliath in Your Industry (Portfolio), and I discovered a similar attitude amongst many of them, too.  Few were interested in picking a fight with Goliath, for sure, but most simply knew that they knew their business better than the big guys did.

Jim Koch, founder of The Boston Beer Company, told me, “Could a giant do what we do?  It’s not impossible.  It’s difficult because it’s not what they’re good at.  They’re good at cost-effectively mass-producing beers that appeal to the mass market.  They could make craft styled beers if they put their minds to it.  But it’s hard for a big company to care about such specialized products.  It’s not outside their capabilities, but it’s like McDonald’s.  Could McDonald’s make filet mignon?  Of course, but it’s not the business they’re in.”

Further, Method’s Eric Ryan echoed this sentiment, saying in response to my question of whether Method could have happened if it were an internal initiative launched at a major CPG (Consumer Package Goods) company, “No, definitely not. If it did, they would look at the business as an insider.  They would know too much.  They would have accepted the way it is and moved on.”

While I take no issue with Seth’s three points above, I’d add a few others:

1.       Presence doesn’t equal attention.  And it certainly doesn’t equate to focus.  As Jim Koch says in theory McDonalds could put filet mignon on every street corner in America, dooming your dreams for a steakhouse empire.  But that’s the last thing on their priority list – and it may be the only thing you’re working on (Hopefully, it’s grass-fed, too).

2.       Culture can be a giant company’s greatest asset – and, at the same time, its most glaring Achilles’ Heel.  Giants aren’t like you anymore.  They aren’t artisans – they’re supply chains.  Their people do different things, want different things, and expect different things than your people do.  For a giant, your little slice of the market may be an 18 month project for an associate brand manager.  Compare that person’s willingness to dig deep into domain expertise to, as Jim Koch described it, “my life’s work.”

3.       You’re bigger than they are, anyway.  Ironic, isn’t it?  Godin mentions in passing that his “little” team at Squidoo had more people working on the business than Google did on competitor Knol.  I recall many years ago when Sony entered the consumer home and small business telephone market, causing many to prematurely predict competitor Vtech’s imminent demise.  Sony’s “team,” as it turned out, was a group of about 3 guys in basement cubicles wishing they were working on something more “Sony-like,” I’m sure.

This is good news.  It means you have one fewer excuse for venturing out in the wilds. The next time your senior management – or your potential source of funding – warns you that you’ll get killed if your local giant steps into your space, point them to the serial entrepreneur’s quotation at the head of this post.

Remember that your giant would rather die than change.