The current state of the economy and society is built on the foundations of a few select businesses in each industry. When you think about groceries, Costco or Woolies or Coles comes to mind. Tech? Google, Amazon, Facebook, Microsoft. Fast food? Wanna go maccas? These businesses have become household names so it would be crazy to think their time is over… right? I disagree. Although we are getting businesses breaking the $1 trillion (that’s $1,000,000,000) market cap, there is still a lot of value being left on the table. Here’s why I believe the era of big business is over and why the internet is the ultimate equaliser.
Too big to optimise – businesses are creating ecosystems and leaving value on the table
A lot of different platforms are following the trend of having a base product, then scaling to a ‘premium’ or ‘super’ tier of that product. For example: apps on your phone. Historically, you would have apps that had a singular purpose, take a photo, look at photos, take notes, etc. Apps have now evolved to ‘super’ apps which are a collection of apps within an app, WeChat is the best example of this. WeChat is a payment system, a social media platform, an Instant Messaging all in one. The intent is simple, the more use cases in one app, the longer the user stays, the more potential to generate revenue. Take this trend and copy paste it to businesses. Amazon transformed the way the Retail market functioned and has moved onto other markets such as entertainment with Prime video, it is competing against Microsoft in the cloud with AWS (Amazon Web Services), etc. Amazon and other businesses are creating ecosystems, not just businesses. The point is, more and more companies are expanding beyond their original industries to compete in others and is creating tremendous value being left on the table because, generally speaking, businesses can only focus on a select few areas at a time. Without the right prioritisation, big businesses are creating avenues for smaller businesses to take a very small part of the value chain and allow them to be world class at it, thereby taking market share.
General Environment Factors – more people are earning money on the internet every day, peer-to-peer interactions are becoming normalised
As people become more and more individualistic and have stronger preferences towards customisations towards themselves, cookie cutter products and services will become less and less relevant. Over the past couple years, we are seeing more and more people make a modest living over the internet. Through platforms like Etsy and Shopify, people are able to take their imagination and creativity and channel them into products that they can sell directly to other consumers and essentially cutting the middle man out. Couple this trend with the introduction and adoption of crypto, a peer-to-peer currency, big businesses that usually acts as the middle-man will become less relevant.
The user is the king – users over businesses, user centric design, power is given to the user
As a product evolves, the idea of scale is a no-brainer. 1 person uses it, great, 10 people, 100, 1000. As the product evolves and scales, the user becomes less and less significant and the focus changes from the the person with a face and name to businesses of varying sizes. This is known as customer segmentation, where businesses using your product are classified into big, medium, small businesses and they become the focus instead of the users.
With the introduction of the internet, coupled with advancements in technology such as API’s, smaller businesses have the ability to compete, at scale, AND focus on the user. With the added focus on the user, small businesses are able to create world-class user experiences and functionalities towards their users. How are they doing this? Instead of owning the entire value chain, they focus on a very small portion of it. If we take Outlook as an example, Outlook is email system, a calendar/personal organisation system and other features but mainly these. Companies like Calendly and AirTable are owning smaller sections of the entire Outlook value-chain by leveraging the power of API’s (Application Programming Interface), which essentially allows these softwares, which are developed by different companies, to work as one. Couple this fact with the customisation factors that allow the user to do what they want, how they want, why would they use Outlook that is focused on scale and bigger businesses where the user is forgotten?
As big businesses are essentially an aggregation of smaller businesses that can’t be fully optimised, windows of opportunity will continue to emerge for small businesses trying to be world-class at a smaller portion of the value chain. Couple this with consumer behaviour trends shifting towards individual preferences, businesses focused on the user experience and giving power back to the user will continue to take market share. Lastly, peer-to-peer transactions are becoming normalised through platforms such as Etsy, Shopify and with the continued adoption of crypto, the middle man will become less relevant.