November 28, 2011

“Below the radar” is a delusion

Some startup businesses believe they can “fly below the radar” to take market share (or build a new category) gradually, escaping the attention of the “big guys” who might crush them.

It was always a delusion, but even more so in an age of high-velocity information. Your small successes may only serve as a laboratory for others to capitalize on. Those “inattentive” big guys (Apple/Toyota/General Foods/WalMart/Chase/Caterpillar/whoever) are not asleep, and neither are new competitors who might observe, adapt, improve your model and market aggressively.

So, if you’re undercapitalized, are you doomed?

Not always. You have two viable options: erect higher barriers to entry (e.g., patent protection, or unique brand messaging), or acquire more capital so you can act quickly to build a big user base. Either option moves you toward owning the category. Of course, you should do both if possible. Timid gradualism won’t cut it – as the Sopranos used to say, “come heavy or don’t come at all.”

1. Raising capital is hard. 2. Elevating a brand is hard. We know little about #1, but we’re good at #2. Call us.