internal-page-background-header.png

On Startups and Market Domination

Dharmesh Shah is a serial entrepreneur who is currently involved with HubSpot.com. They have just announced $32 million investment from Sequoia, Google and Salesforce.com, so it is one for us to maybe aspire to at this stage!

The reason for highlighting this here is that Dharmesh writes a clever blog on a useful website he has set up called OnStartups.com. It's a resource every startup company should be using if not doing so already.

In his latest article he talks about web development companies and SaaS in particular. There are a couple of interesting arguments there (such as you can't bootstrap a SaaS company). I liked the simple model where he says a company has 4 primary areas - Product, Marketing, Sales and Customer Service. Leaving out Product for a moment, he shows how putting emphasis on one of the other 3 can detriment the remaining 2 e.g. if you put too strong an emphasis on generating lots of sales leads you may end up with a low-quality customer list or a high support load.

Putting Product back into the mix, he says it's the one area where improvements make everyone happy.

I like the way Dharmesh comes up with deceptively-simple models for the way that you can configure a startup company. Compared to a lot of writing on the topic, he always give clear advice - you can at least understand it even if you don't agree with it.

He talks about dominating a market and sets a challenge to come up with the #2 and#3 competitors to Amazon, NetFlix, VMware and eBay. He doesn't add Salesforce to the list but he does mention them as dominant in the article. I'm not sure that he's right on VMware - we're a technical partner but I'm also aware of many competitors such as Citrix and Microsoft. Not sure I agree with Salesforce either - I can think of SugarCRM (and so can HubSpot, who cite them as one of two CRMs that can be integrated) as well as Microsoft Dynamics. We offer plug-ins for both Salesforce and SugarCRM, so we don't see a dominator.

It seems to me that B2B companies such as Salesforce and VMware are going to find it hard to become oligopolies compared to B2C companies such as Amazon (I'm assuming he's talking about the book-selling side). I can't pretend to know why exactly, but I suspect is has something to do with the extent to which these sites provide all that the consumer needs *at this point in time*. It's like the UX "don't make me think" principle, but re-expressed as "don't make me change". I like to buy books and CDs on Amazon like many people, but the moment I find that there is somewhere cheaper that doesn't screw up my order, I'm gone.

Tags: On Startups, business management tools, Business Process Models