As founder of an Internet-based events marketplace I have always loved Google unquestionably because without them my company would not exist. For years, through the magic of organic SEO, we’ve derived the vast majority of our customers from Google. Put simply: without Google, there would be no GigMasters.
My devotion to Google was severely tested this past summer, though, when the equity venture wing of the company, Google Capital, led a $100 million investment in a company that could easily become a competitor of ours, Thumbtack, a general services marketplace formed just a few years ago. With their vast war chest of cash, I quickly watched Thumbtack buy their way to the top of Google searches via AdWords.
For those that aren’t familiar with Thumbtack, they are a site that connects you with plumbers, painters, and tennis instructors among other things. It hasn’t been a direct competitor of ours — our focus is on entertainment and event bookings. Most folks don’t typically book their wedding entertainment from the same place they hire a plumber. Flush with cash, however, Thumbtack isn’t going to let that stop it. It has already started spending in the events space — listing wedding bands right along with electricians.
It does bring up interesting questions: What to do when Google, or another behemoth, invests such a large amount of money in a company that competes with parts of your business? How, as a small business owner, should you react?
If you find yourself in a similar situation, exhale. $100 million may sound like a blow to the gut. You may be worried your competition can now eat you for lunch, but fear and panic don’t get you through tough situations. Instead, take my advice:
1. Flex your muscles: Focus on one core strength
Too often we try to become the jack of all trades. However, the Internet rewards companies that do one thing REALLY well. Don’t do several things ok, do one thing the BEST. For us, the goal is to be the best event booking service on the web.
The idea of focus extends to all aspects of our business. Everything we do, every dime we spend, is in support of this one mission. We know that once your company grows a bit and there’s more money in the bank, it’s tempting to “cast a wider net.” When you’re going up against a well-funded competitor, it’s essential that every dollar is going toward perfecting your core strength. Sit down with your executive team. Review every line item in your budget. Is it helping you become the best at one thing? You can’t afford to waste a single dollar on something, or someone, that isn’t focused on growing or perfecting your core. Find your strength, and double down on it.
2. Pack a punch — spend every day differentiating yourself
It wasn’t as important before, but the game is different now — you’re officially playing in the big leagues. It’s time to take the gloves off. Go on the offensive and articulate how you are beneficially different from this large player.
It’s crucial to continuously highlight the beneficial difference between you and the competition — whether that be in your business model, your product, or even your packaging style. Don’t get mad. Don’t swing wildly. Just calmly but solidly articulate your difference. And do it often. Do it everywhere, every day.
3. Take some risks! Your competitor now has way more to lose
The silver lining in this situation is that your competitor now has some pretty hard core investors breathing down its neck. It will be feeling the pressure. The expectations for large investor returns is high, so your competitor now has a LOT to lose. It will slowly become more risk averse. Rejoice in the fact that you are free of this. In fact, you can now take even more risks, as long as the end goal is in support of your core strength.
4. Use your small size to make a big impression
If you’re familiar with the story of David and Goliath, you know bigger isn’t always better. Now more than ever, use your small size to your advantage and do things that a behemoth brand can’t possibly do. Get on the phone and talk to your customers, as many as you can. Send them more than coupons — send handwritten thank you cards and membership anniversary cakes. See a comment on your Facebook page from someone who likes your company T-shirt? Mail them one and you’ll receive their graciousness in the form of advocacy.
5. Keep your team top-notch
In the world of Internet, product development is the ultimate level playing field. To create a great product, you need a handful of talented developers, designers, and product people with an insane work ethic who are as passionate about your product as you are. You need marketing hustlers to get the word out, and you need customer service reps who treat your customers like family. Your competitor’s big new influx of cash could lead to quick hires that could put its company culture off balance. The best way for you to take advantage of that is not to compromise your team with sub-optimal hires. Make sure everyone on your team is fully committed.
Bottom line? Zero in on your strengths and take some risks along the way. The real secret to surviving isn’t what you need, it’s what you don’t need, and that’s $100 million.
Mike Caldwell is CEO and cofounder of online events service GigMasters.