Should startups compete with big companies?

I was talking with a friend a few weeks ago who said he had been toying with a startup idea. But, he recently abandoned the idea because a Fortune 500 company announced they were experimenting with a similar product.

My response was that this was great news for him and his idea.

  • Big companies only pursue opportunities that meet certain revenue potential. For example, I know of one large company that will not pursue an opportunity that cannot become a $50 million business within 24 months
  • There’s plenty of room in big markets for multiple companies to be successful
  • Big companies do not bear all of their resources with a new product. Typically, BigCos may devote 5 – 20 people to an “expedition” team that will try to validate the opportunity
  • BigCos may abandon an opportunity that cannot generate $50M+. However, the opportunity may still be large enough for startups, especially those bootstrapped
  • Startups that are focused can compete head-to-head with larger companies that have more resources

Competing against an aggressive, established company can be scary. But, it also doesn’t spell doom for a startup.